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Procter & Gamble Moving Higher On Analyst Sentiment

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Procter and Gamble (NYSE: PG) reported financial results last Friday, and while many on the Street concluded that the report was mixed, there were some positive catalysts that were mentioned.

Morgan Stanley believes quality of earnings disappointing; reiterates Equal-weight rating and an $89 price target:

“PG Q4 core EPS of $0.95 was above the $0.91 consensus, but quality was disappointing. 2% org sales growth was in-line with expectations, but disappointing as unrounded sales were up 1% and +~7%. Grooming growth was aided by FlexBall pipeline fill. Gross profit was -2% below consensus on a 40 bp (basis point) GM miss, with 4% lower SG&A than expected on cost-cutting/lower marketing leading to a 1% operating profit beat.”

Deutsche Bank reiterated a Buy rating; the firm currently has a $90 price target on Procter & Gamble:

“Armed with considerable restructuring savings, easy sales comparisons and waning F/X headwinds, big picture trajectory from here looks compelling provided anemic category growth rates stabilize from here and desperate retailers and competitors move beyond aggressive discounting to lift volumes. With significant earnings flexibility building to reinvest in its brands and channels and most signs pointing to a US recovery on the horizon, sales and market shares should stabilize and income growth should accelerate, with stock tracking EPS growth and perhaps modest multiple expansion. Maintain Buy, $90 target.”

Canaccord Genuity reiterated a Buy rating and $89 price target:

“Management also announced a new strategy for the company which will see it exit 90-100 non-core brands over the next 1-2 years. The disposals will be slightly dilutive but they will allow the company to focus its investments more effectively, and should reduce complexity. The ongoing business will be focused on 70-80 brands across 12 units. A.G. Lafley has confirmed his commitment to the CEO role during this transition. The new strategy should deliver additional savings over and above the $10bn already identified, but these were not quantified.”

Procter & Gamble gaped higher on the Monday morning session. Based on the comments from analysts we have mentioned, the stock may appreciate from $79.65 to $89-$90, which implies 11.7 percent upside from Monday's levels.

Latest Ratings for PG

DateFirmActionFromTo
Oct 2014Erste Group
Oct 2014Bank of AmericaBuy
Aug 2014CitigroupMaintainsBuy

View More Analyst Ratings for PG
View the Latest Analyst Ratings

Posted-In: Canaccord Genuity Deutsche Bank Morgan StanleyAnalyst Color Analyst Ratings

 

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