There’s an attractive entry point in shares of Church & Dwight — the company behind brands such as Trojan, OxiClean and Arm & Hammer — as the company will likely bounce back from a recent difficult patch, according to Deutsche Bank. Analyst Steve Powers upgraded Church & Dwight to buy from hold, saying he sees the company’s current turmoil as a blip from which the company will recover rather than than a sign the company is in serous trouble. “We see more upside in the Bull Case vs. downside in the Bear Case,” he said Tuesday in a note to clients. Church & Dwight has been under pressure this year, losing 28.5%, as concerns over a potential U.S. recession dented the stock, along with the broader market. Still, the company has been acquiring smaller competitors like TheraBreath and Hero as it aims to broaden its foot print within the home goods and consumer products space. Powers did trim his price target on the stock by $5 to $85. However, that still implies upside of about 15% from Tuesday’s close. That target also reflects what Deutsche forecasts as a difficult end to the company’s fiscal year, before seeing steady improvement in supply chain and discretionary headwinds decelerating in 2023. There should be improved market share given value and that increased supply on top of benefits from new products and distribution expansion, he said. But Church & Dwight will have to battle continued headwinds from its discretionary portfolio, which Powers described as facing “rapid deterioration.” The company’s new product and acquisition strategy has raised red flags for some, specifically as it has been criticized previously for straying too far from its core product base. But Powers said the recent acquisitions better align with Church & Dwight’s portfolio and create smart growth opportunities. — CNBC’s Michael Bloom contributed to this report.
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