Ahead of the Bell: Kimberly-Clark cuts guidance

Wachovia Capital Markets LLC analyst Jason Gere reduced his rating to "Market Perform" from "Outperform," saying that cost inflation that had hurt second-quarter earnings, and the company's 2008 outlook leave the stock little room to rise.

"We view the stock as dead money until cost inflation is contained or subsides," Gere wrote in a note to investors.

Shares fell $4.31, or 7.3 percent, to $54.49 in pre-market trading Tuesday, below their 52-week low of $58.62 set the day before.

Goldman Sachs analyst Andrew Sawyer kept a "Sell" rating on the stock, saying he anticipates further increases in commodity costs, adding the company's lower advertising spending could hurt sales and market share. He lowered his 12-month share price target by $4 to $58.

After the market closed Monday, Dallas-based Kimberly-Clark predicted full-year earnings per share of $4.20 to $4.30, lower than an earlier estimate of $4.45 to $4.60 per share. On average, analysts expect earnings per share of $4.52, according to a poll by Thomson Financial.

Kimberly-Clark also said inflation costs would reach $900 million this year, double what it had originally estimated.

For the second quarter, Kimberly-Clark estimated income of $1.03 per share, lower than a previous expectation of $1.08 to $1.11 per share. Analysts forecast earnings of $1.09 per share.

Kimberly-Clark is expected to announce its second-quarter results on July 24.

Citi analyst Chip Dillon noted the quarterly earnings shortfall was the "first major miss since 2002" for the consumer products company.