Freedom Broker experts upgraded their recommendation on Kimberly-Clark (KMB) shares to “Buy” and maintained the target price at $121 per share, implying upside potential of about 8.5% from the current price of $111.5. In the experts’ view, weaker revenue performance in the second quarter was driven mainly by temporary factors, while the underlying fundamentals of the business’s profitability remain strong.
What Kimberly-Clark is
Kimberly-Clark (KMB) is one of the world’s largest manufacturers of consumer staples and personal care products. The company produces goods under the Huggies, Kleenex, Cottonelle, Scott and other brands, and is also in the process of acquiring consumer health products maker Kenvue (KVUE), known for the Listerine, Band-Aid and Tylenol brands.
Revenue issues are temporary
As Freedom Broker analysts note, Kimberly-Clark’s report should be divided into two parts. The first is weaker revenue, which came under pressure from one-off negative factors. The second is a noticeable improvement in profitability, confirming the effectiveness of the company’s productivity enhancement program.
In the second quarter, net revenue increased by only 0.6% year over year to $4.2 bn, below the consensus forecast of $4.23 bn. At the same time, adjusted gross margin rose by 190 basis points to 38.8%, adjusted operating profit increased by 6.2% to $757 mn, and adjusted earnings per share (EPS) came in at $2.12, beating analysts’ expectations ($2.00).
According to Freedom Broker experts, the key factor behind weak sales momentum was temporary circumstances, including retailer inventory reductions, a fire at a distribution center in Los Angeles, and an information crisis around the diaper brand in China. At the same time, the company maintained positive volume dynamics in most international markets, and the productivity program continues to deliver a tangible effect.
Why the company lowered its guidance
Despite strong profit results, Kimberly-Clark’s management revised its 2026 outlook.
The company cut expectations for consumer category growth to 2% versus the previous 2.5% and cited more cautious shopper behavior, especially in North America. Organic sales are now expected to be about 100 basis points below market growth. In addition, management warned that the fallout from the crisis around the diaper brand in China will continue to weigh on results in the second half.
Freedom Broker maintains a positive view
Despite the lower forecast, Freedom Broker analysts consider the market reaction overly cautious.
In their view, a significant portion of the negative factors is temporary and does not reflect the fundamental condition of the business. Additional support comes from the high effectiveness of the productivity enhancement program, which is already ahead of its own annual targets.
First-quarter results
Kimberly-Clark continues a large-scale business transformation. In 2025, the company announced the purchase of consumer health products maker Kenvue (previously owned by Johnson & Johnson) for about $48.7 bn, as a result of which one of the world’s largest manufacturers of health and consumer staple products will be created with combined annual revenue of about $32 bn. Kimberly-Clark is also implementing a manufacturing capacity modernization program, including investments of over $2 bn in the development of manufacturing and logistics in the U.S.
This is not an individual investment recommendation.