Morgan Stanley: Procter & Gamble Co. Q1 'Better Than Feared'

Procter & Gamble Co.'s (NYSE: PG) in-line first-quarter earnings suggests an improving "quality" of results in a difficult environment for consumer products, an analyst said Friday.Results were overshadowed by news of P&G's plan to split off its Duracell battery business as a separate company. P&G closed Friday up nearly 2.5 percent at $85.27 a share.Morgan Stanley's Dara Mohsenian reiterated a Neutral rating but said he's "encouraged" by first-quarter results that were "certainly better than feared."Results revealed that its gross margin widened for the first time in 18 months.The company's quarterly sales growth of 2 percent met Wall Street expectations, which Mohsenian saw as a relief given widespread recent disappointments from P&G's peers.Net income fell 34 percent, although adjusted earnings of $1.07 a share also met views.The Duracell exit "should be viewed favorably" as part of the company's announcement earlier this year to divest about 100 "non-core" brands, Mohsenian said.Separately, Credit Suisse's Michael Steib called recent A.C. Nielsen estimates of September U.S. sales for household consumer products "neutral" for P&G.Nielsen estimate that total household consumer product sales grew 1.6 percent in September, including a 0.8 percent decline in units and growth of 2.4 percent from a combination of higher pricing and shifting product mix.Nielsen estimated that P&G's September sales grew by 0.9 percent, including a growth of 0.3 percent in units and 0.6 percent from in pricing and product mix.