Goldman: Consumer-Products Firms Poised to Grow Again

Wednesday, 12 Jan 2011 01:38 PM

 

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Consumer-products companies coming off a rocky 2010 should see a more stable future ahead of them in 2011, a Goldman Sachs analyst said Wednesday.

Manufacturers and retailers tried to stimulate shoppers to buy more with aggressive promotions, which often failed or cut into profitability.

But analyst Andrew Sawyer said in a research note that companies should see U.S. profits grow in 2011 as ease back on pricey promotion and real demand for products becomes more firm.

Sawyer upgraded his rating on Church & Dwight Co. Inc. to "Buy" from "Neutral" saying that the company's market share is growing and pricing can climb during the year. Shares rose $2.46, nearly 4 percent, to $71.55 in midday trading.

Church & Dwight makes many of the products consumers see on grocery store shelves, from Arm & Hammer to First Response home pregnancy kits.

He reiterated a "Buy" rating on Procter & Gamble Co., as it was one of the companies most heavily involved in promotion during 2010 and backing away from that could help it in 2011. It also has strong growth opportunities in emerging markets. Shares of Procter & Gamble rose 54 cents to $64.58 in midday trading.

Procter & Gamble's products are sold in nearly 200 countries and its health, beauty and home care products are sold everywhere from Walmart to local corner stores.

However, he maintained a "Sell" rating on Kimberly-Clark Corp., saying profits should improve but see it coming in below forecasts as it copes with some carryover cost inflation. The company's shares rose 70 cents to $63.49.

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