Financial world sends mixed messages on Kimberly-Clark prospects

The fact that share prices recently reached a 52-week high on the back of the improved financial performance led financial researcher Zacks to raise its earnings estimates for the company and upgrade its share evaluation to ‘buy’, today.

The rating comes in stark contrast to that of Barclays Capital, which only yesterday downgraded Kimberly-Clark shares due to concerns over its future growth prospects.

Barclays downgrades shares​

Barclays Capital analyst Lauren Lieberman downgraded her rating for the company’s shares to ‘underweight’, stressing that better than expected third quarter profit and an increased 2009 outlook hid a deterioration in its ‘fundamentals’.

Lieberman added that the downgrade had been influenced by the fact that Kimberly-Clark has specified it will limit reinvestment, which she said would in turn put a cap on growth prospects.

The past year has been a tough one for the fast moving consumer product and personal care giant, with organic sales falling in the face of the challenging economic conditions worldwide.

Sales down but profits up​

Although the most recent third quarter results showed that sales had continued to decline, the battle to reduce costs appeared to have put the company in a much improved position.

Net income during the quarter rose from $413m in the corresponding period last year to $582m, a figure that was achieved through double digit organic sales growth in developing markets, alongside significant cost savings and lower commodity prices.

Net sales in the quarter fell by 1.7 percent to $4.9bn, which the company said was largely down to currency translations offsetting organic sales growth of 3 percent, while sales volumes remained flat compared to the previous year.