Buy this defensive consumer stock as recession fears grow, Atlantic Equities says

As recessionary fears mount and economic growth concerns persist, Atlantic Equities says investors should put their money in resilient consumer names such as Kimberly-Clark . Analyst Edward Lewis upgraded shares of the Huggies and Kleenex maker to overweight, citing an attractive entry point for the stock following the recent market pullback. “KMB offers attractive exposure to categories that we expect to remain resilient as growth slows,” he wrote in a note to clients Wednesday. “At the same time, cost pressures are likely to ease supporting margin expansion and EPS recovery. We do not see this opportunity adequately reflected in the current share price valuation.” In his upgrade, Lewis also highlighted recent management changes at Kimberly-Clark under its new CEO. “No less than eight senior executives have joined from outside the company; senior management has protected rather than cut spending on digital capabilities even as cost pressures have increased; and, market shares have risen as the focus has been more on innovation, less on promotion,” he wrote. Lewis also thinks cost pressures from Kimberly-Clark’s exposure to pulp, resin and energy, which have hit gross margins, should ease into 2023. Lewis maintained the firm’s $135 price target on Kimberly-Clark, suggesting a 21% upside for shares from Tuesday’s close despite falling 22% this year. — CNBC’s Michael Bloom contributed reporting

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