J.P. Morgan Downgrades Colgate - TheStreet



) --

J.P. Morgan

(JPM) - Get Report

has downgraded


(CL) - Get Report

to neutral from overweight, even though it continues to possess "the best fundamentals in our universe," the analysts wrote in a note to investors Friday.

"We think its valuation already reflects this," the analysts wrote.

J.P. Morgan also sees less room for positive marginal change with Colgate-Palmolive, as the company has now accrued most of the benefits from its restructuring program and its top line has held in much better than its peers.

Furthermore, the analysts write that Colgate-Palmolive's exposure to emerging markets has propelled best-in-class organic sales growth, but think that the gap will narrow in 2010. They explain that the company's organic sales growth only decelerated to the low of 6% in the second quarter fiscal 2009 from the high of 9.5% in second quarter fiscal 2008, as weaker organic volume growth was offset by better pricing; and with less of a slowdown, there is also likely less room for re-acceleration versus peers.

As part of their 2010 outlook, J.P. Morgan downgraded

The Coca-Cola Company

(KO) - Get Report

today for many of the same reasons.

Colgate shares have fallen by 1.7% to $81.60 in morning trading and Coke has tumbled by 2.2% to $55.

Peers like

Newell Rubbermaid

(NWL) - Get Report


Procter & Gamble

(PG) - Get Report

should see better sequential topline performance in 2010, according to the analysts. The analysts added that right now they prefer cheaper names in consumer goods for 2010, such as


(CLX) - Get Report

and Newell Rubbermaid.

Shares of Procter & Gamble are down 0.6% to $60.20, while Clorox is essentially flat at $61.31. Newell Rubbermaid has fallen 1.4% to $15.60.

-- Reported by Andrea Tse in New York

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