Church & Dwight's (CHD) Q1 performance was weak due to inventory destocking, slower market growth, and tariff effects, but current guidance reflects these challenges accurately, RBC Capital Markets said in a note Monday.

The company lowered its full-year 2025 guidance, now expecting adjusted earnings per share growth of 0% to 2%, compared with its earlier forecast of 7% to 8%. Organic sales growth is projected at 0% to 2%, down from the prior 3% to 4% range.

The brokerage said the revised guidance accurately reflects current headwinds, adding that Q2 is expected to remain pressured, but a modest recovery is anticipated in the second half of the year.

Despite the near-term challenges, RBC highlighted Church & Dwight's continued share gains across key categories such as laundry detergent, mouthwash, and skincare, largely driven by volume growth.

The acquisition of Touchland is viewed positively, with expectations of strong growth, high consumer loyalty, and eventual earnings contribution starting in 2026.

Touchland has strong repeat purchase rates and growing household penetration, and Church & Dwight plans to expand its reach through premium retail channels and later into mass markets. The acquisition could offer international growth and synergy opportunities, especially through retailers like Sephora, according to the note.

Earnings estimates for 2025 and 2026 have been raised, with expectations of improved margins due to better productivity and normalized marketing costs.

RBC upgraded Church & Dwight to outperform from sector perform and raised its price target to $114 from $100.

Price: 98.59, Change: +0.27, Percent Change: +0.27