Analyst Insight: Citigroup Lowered 2010 EPS Estimates For Colgate-Palmolive August 9, 2010

Citigroup analysts are lowering their 2010 EPS estimates of Colgate-Palmolive (NYSE:CL) due to a 68 percent increase in financing activities: $1.1 billion compared to the $665 million spent in the year-ago period.

Analyst Wendy Nicholson said, "Given our expectation that CL will ramp up investment spending to accelerate top line growth, and given that the macro backdrop in CL's emerging markets remains favorable, we argue that CL should trade at a 15 percent relative premium to the S&P 500 (up from 10 percent, previously). With CIRA's 13x market multiple, our 15 percent target premium and our CY10 EPS of $5.25, we derive a target price of $79. We consider the stock's current valuation of 15x our 2011 EPS estimate to be fair, and maintain our Hold (2L) rating."

The bank lowered its fiscal 2010 EPS down to $4.73, from $4.95 per share, vs. consensus estimates of $4.83 per share.

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