2Q Follow-Up: Signs of Sparkle Returning in H2

研报英文原文证据摘录

2Q Follow-Up: Signs of Sparkle Returning in H2

des EPS flex and

Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

should help drive forward sales, and allowed CL to move FY26 EPS growth guidance framework

** = Based on consensus methodology

to the higher end (MSD%) of its prior LSD-MSD % range, which we think will drive § = Consensus data is provided by Refinitiv Estimates

e = Morgan Stanley Research estimates

~2% positive consensus CY26 EPS revisions. Net, we are cognizant that CL's stock

has run up 16% YTD well above CPG peers, driving more premium valuation, and its

OSG did trail EM-centric peers in Q2. However, consistent with our bullish January

note "Moving to Top Pick in HPC with Potential Inflection in OSG Above Peers in

2026 and Solid EPS Visibility", we do see visibility building that CL's OSG will

sustainably return to 3-4% in H2 and 2027 with robust EM growth, solid pricing

power vs HPC peers, share gains in pet and oral care, and as PL pet discontinuations

drop off. Post Q2, we raise our FY26/27 EPS estimates +2.5%/4.5%, respectively, and

our PT moves to $104 from $100 on higher EPS, based on a 25x CY27 P/E multiple

offering +14% potential stock upside.

Q2 EPS Upside: CL reported solid Q2 upside, with EPS of $0.99 above the $0.95

consensus on 3.5% profit upside (despite marketing +8% above consensus), driven

by in-line 2.4% OSG (2.8% ex pet PL discontinuations), and 175/65 bps of GM/OM

upside, with a quarter of GM upside due to tariff refunds. Volume/mix of +0.8% was

close to the +0.7% consensus and pricing of +1.6% was close to the +1.8%

consensus. CL also raised FY26 EPS guidance to MSD from +LSD-MSD EPS growth, Morgan Stanley does and seeks to do business with

companies covered in Morgan Stanley Research. As a result,