03:10 PM EDT, 10/18/2024 (MT Newswires) -- Colgate-Palmolive's ( CL ) sentiment "has become far more mixed" despite year-to-date outperformance partly due to cautious commentary from competitors and concerns over valuation, UBS Securities said in an earnings preview emailed Friday.

"We believe the risk-to-reward ratio continues to skew to the upside despite top-line growth slowing sequentially," UBS added.

Despite a significant underperformance in the past six weeks, UBS sees the possibility for the quarter's results to act as a positive catalyst.

However, concerns are emerging as top-line growth slows due to tougher comparisons and normalization in category growth, prompting investors to question the sustainability of Colgate-Palmolive's ( CL ) recent outperformance, according to the note.

The firm said it believes that the company's strong fundamentals may still make the quarterly results a positive catalyst, while investors remain uncertain about whether Colgate-Palmolive ( CL ) can continue to outperform.

UBS projects that Colgate-Palmolive's ( CL ) Q3 organic revenue growth will be over 6%, slightly below consensus, as growth is moderating due to weaker trends in the US and international markets.

Colgate-Palmolive ( CL ) Q3 earnings are scheduled for Oct. 25.

UBS projects Colgate-Palmolive's ( CL ) 2024 earnings per share estimate of $3.57, which is only a penny below consensus and positioned at the higher end of the implied guidance range of between $3.49 and $3.59.

The firm expects gross margin expansion, driven by cost savings to offset foreign exchange and commodity pressures.

UBS reiterated its buy rating on Colgate-Palmolive's ( CL ) stock and kept the price target at $122.

Price: 100.42, Change: +0.39, Percent Change: +0.39