TD Cowen moved Colgate-Palmolive to a Hold rating from Buy and lowered its price objective to $85 from $96, signaling concern that elevated input costs linked to oil-based materials and tallow will weigh on earnings for multiple quarters.
Analyst Robert Moskow based the new target on what he described as "a 21x multiple on our FY27 EPS estimate of $4.02." In the firm’s note, TD Cowen said it is reducing its earnings projections as a result of "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."
Following these cost assumptions, TD Cowen now models 4% EPS growth in 2026 and 4.5% in 2027, both of which the firm notes are below consensus expectations. The analyst pointed to Colgate’s emerging-markets exposure as a common rationale for investor confidence in the company’s pricing power, but cautioned that prior experience tempers that view. Moskow highlighted that "the 13% negative revision to consensus EPS expectations in 2022 suggests that their resilience may not be as strong as investors believe."
TD Cowen also raised concerns about Colgate’s U.S. segment. The note states the domestic division "may require incremental investment to improve sales given weak results in 2025 and a slow start in 2026." That potential need for additional spending could further limit margin expansion in the near term.
Colgate-Palmolive has been emphasizing science-led product innovation, enhanced data analytics and more targeted marketing, while accelerating productivity programs intended to provide margin flexibility. TD Cowen acknowledged these initiatives but warned that near-term earnings growth remains exposed to cost pressures stemming from the Iran war and to limited pricing power in developed markets.
Investors and market participants following consumer staples and commodity-linked cost dynamics may weigh TD Cowen’s revised outlook as they reassess valuation and near-term performance expectations for Colgate-Palmolive.