Investing.com -- Shares of Colgate-Palmolive (NYSE:CL) traded lower in pre-market trading on Monday following a downgrade by analysts at Stifel.

The brokerage moved its rating to “hold” from “buy” and slightly reduced its price target to $101, reflecting a valuation of 17 times the projected EBITDA for 2025.

While Stifel’s estimates for the company’s performance from 2024 to 2026 remain largely unchanged, the analysts expressed concerns about the company’s growth trajectory, particularly in light of increasingly challenging comparisons in organic sales growth.

Despite Colgate’s robust fundamentals, including approximately 4% volume growth and a strong performance relative to other large-cap consumer staples companies, Stifel anticipates a slowdown in organic sales growth.

After reporting high single-digit growth rates in recent years, the analysts project a more modest growth of 4% to 5% over the next four quarters.

This shift is due to tougher year-over-year comparisons, which are likely to hinder any significant re-rating of Colgate's valuation in the near term.

The downgrade follows an increase in Colgate’s gross margin for the third quarter of 2024, which improved by 270 basis points year-over-year, exceeding consensus expectations.

The rise in gross margin was driven by cost-saving initiatives, pricing strategies, and product mix adjustments, although it was somewhat offset by increased raw material costs.

Management flagged that their ability to adjust the profit and loss statement has allowed the company to continue investing in advertising and other strategic areas.

Stifel’s analysts noted that while Colgate is experiencing strong sales growth, Procter&Gamble (NYSE:PG) is expected to accelerate its growth, which could put pressure on Colgate's market position.

The two-year sales compound annual growth rate for Colgate has outpaced that of Procter&Gamble since the second quarter of 2023, but Stifel predicts a reversal, with P&G benefitting from easier comparisons while Colgate faces a deceleration.

Colgate maintains a dominant position in the global oral care market, holding more than 40% of the market share in toothpaste.

The company's oral care segment continues to perform well, with strong growth and expanding market shares.

However, in the U.S., there has been a slight decline in value share for toothpaste and manual toothbrushes.

Moreover, the company reported a solid performance in its pet nutrition segment, which accounted for about 22% of its sales in the third quarter.

This area saw an organic sales growth of 6.5%, contributing significantly to Colgate’s overall growth.