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Procter & Gamble Gets Focused, Jefferies Initiates With A Buy

Procter & Gamble Gets Focused, Jefferies Initiates With A Buy
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Procter & Gamble Co (NYSE: PG) appears poised for top-line growth. Jefferies’ Kevin Grundy initiated coverage of the company with a Buy rating and a price target of $95. The analyst expects the company to generate organic sales growth of 3.5 percent by FY18, which is in-line with the industry, but ahead of the expectation of ~2.5-3 percent.

Procter & Gamble’s organic sales growth is expected to be driven by its “slimmed down portfolio, better focused on geos/categories where it can (and should) win,” analyst Kevin Grundy said. An inflection in organic sales and EPS upside are likely to act as catalysts for the company’s shares.

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Long-Awaited Topline Recovery In Sight

Grundy mentioned that Procter & Gamble is expected to return to 3.5 percent organic sales growth by FY18, from 1 percent average growth during FY15-FY16, driven by:

  • EMs: A return to market growth rates of 5-7 percent, versus a decline of 1 percent in FY16
  • US: Nielsen data reveals 2 percent industry growth year-to-date “on P&G led innovation,” up +1.5 points since 2013-2014

“P&G has shed 15%/5% of sales/profits, streamlined its portfolio, and continues to rationalize its cost structure. While now better positioned to win, an inability to improve org sales trends and/or TSR (P&G has underperformed the XLP in 8 of last 10 years) likely will (and should) lead to further changes,” the analyst wrote.

Latest Ratings for PG

Oct 2016Argus CapitalUpgradesHoldBuy
Aug 2016Johnson RiceUpgradesAccumulateBuy
Aug 2016B. RileyUpgradesNeutralBuy

View More Analyst Ratings for PG
View the Latest Analyst Ratings

Posted-In: Jefferies Kevin GrundyAnalyst Color Long Ideas Initiation Analyst Ratings Trading Ideas Best of Benzinga


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