Beauty care products maker Alberto Culver (ACV) is headed for stiffer competition with Procter & Gamble (PG) and Unilever (UL), writes Stifel Nicholaus analyst Mark Astrachan in downgrading the shares to “Hold” from “Buy.” Although ACV continues to gain market share, the market for shampoo and conditioner in the U.S. “remains highly competitive,” writes Astrachan. Alberto Culver has been able to pick up share while spending less than P&G and Unilever, he observes, but in the fourth quarter, P&G picked up more market share for every percentage point of spending on additional marketing, which suggests marketing costs are going to go up for all players, including ACV.
Astrachan also sees limited new markets for ACV, which means the company’s target of single-digit revenue growth this year won’t materialize until the second half of the year.
Alberto Culver shares are up 20 cents, or 0.7%, at $29.49.
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