Analyst cuts Colgate-Palmolive on rising input costs, slower earnings growth

Investing.com -- TD Cowen downgraded Colgate-Palmolive to Hold from Buy on Tuesday, warning that rising costs tied to oil-based inputs and tallow may pressure earnings over the next several quarters.

Analyst Robert Moskow cut the firm’s price target to $85 from $96, based on “a 21x multiple on our FY27 EPS estimate of $4.02,” according to the note.

TD Cowen is trimming its earnings forecasts for the company due to “heightened inflationary pressure from 3Q26 through 2Q27 from higher prices of oil-based inputs (e.g. resins) and also potentially higher costs for tallow, which are up 40% vs year ago on the Chicago Mercantile Exchange.”

The firm now expects 4% EPS growth in 2026 and 4.5% in 2027, both below consensus.

While some investors view Colgate’s emerging-markets exposure as offering stronger pricing power than peers, Moskow cautioned that “the 13% negative revision to consensus EPS expectations in 2022 suggests that their resilience may not be as strong as investors believe.”

He added that the U.S. division “may require incremental investment to improve sales given weak results in 2025 and a slow start in 2026.”

The company has emphasized science-based innovation, improved data analytics and more selective marketing in recent years. It has also accelerated productivity initiatives to create margin flexibility.

However, TD Cowen warned that “near-term earnings growth” remains vulnerable to “rising cost inflation from the Iran war and limited pricing power in developed markets.”

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