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Why Procter & Gamble Is under Pressure from Activist Investors

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Part 4
Why Procter & Gamble Is under Pressure from Activist Investors PART 4 OF 5

Here’s What Analysts Recommend for Procter & Gamble

Rating summary and target price

Analysts providing recommendations for Procter & Gamble (PG) continue to maintain a neutral outlook on the stock with a consensus score of 2.5 on a scale of 1.0 (implying “strong buy”) to 5.0 (for “strong sell”). Of the 22 analysts covering PG stock, 41.0% recommend a “buy,” 50.0% maintain a “hold,” and 9.0% have a “sell” rating. PG stock closed at $93.27 on Friday, September 15, 2017, which is almost at par with analysts’ target price of $93.58 per share.

Here’s What Analysts Recommend for Procter &amp; Gamble

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Procter & Gamble reported improved fiscal 4Q17 results and expects higher sales and profitability in fiscal 2018 on the back of innovation-led new products and incremental cost savings. Following the company’s better-than-expected 4Q17 results, Jefferies and Morgan Stanley raised their target prices for PG stock.

However, the company’s soft sales and tepid fiscal first half of 2018 outlook, coupled with moderating category growth, are keeping analysts at bay. Also, the company’s profitability could take a hit from rising input costs, unfavorable mix, and increased competition. A challenging retail landscape with retailers destocking inventory and macroeconomic and political concerns in emerging markets raise further concerns.

Analysts’ ratings for peers

Analysts also have a neutral outlook on consumer product companies, as moderating category growth is likely to affect the financials of these companies. Rising commodity costs could also adversely impact the margins.

Of the 22 analysts covering Colgate-Palmolive (CL) stock, 13.0% recommended a “buy,” and 87.0% have a “hold” rating. As for Kimberly-Clark (KMB), 7.0% of the 15 analysts maintained a “buy” rating on the stock, and 93.0% recommended a “hold.”

About 12.0% of the 17 analysts covering Clorox (CLX) stock rated it a “buy,” 82.0% maintained a “hold,” and 6.0% recommended a “sell.” About 14.0% of the analysts covering Church & Dwight (CHD) rated the stock a “buy,” 64.0% recommended a “hold,” and 22.0% rated it a “sell.”

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