Consensus target price indicates downside

The majority of analysts continue to suggest “holds” on Procter & Gamble (PG) stock. The company has impressed with its underlying sales growth in the first half of fiscal 2019. Meanwhile, it continues to outperform analysts’ EPS expectations despite significant cost headwinds.

However, the company’s low growth rate and unattractive valuation are keeping analysts on the sidelines. Its top line growth is expected to remain muted, as currency volatility and heightened competitive activity are likely to hurt it. Meanwhile, higher input and logistics costs have more than offset the benefits of improvements in pricing and cost and efficiency savings.  

What Analysts Suggest for PG Stock ahead of Its Q3 Results

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Analysts have a consensus target price of $101.12 per share on Procter & Gamble stock, implying a potential downside of 5.0% based on its closing price of $106.42 on April 16.

Wall Street also maintains a neutral outlook on the stocks of Kimberly-Clark (KMB), Colgate-Palmolive (CL), Church & Dwight (CHD), and the Clorox Company (CLX). Margin headwinds and low EPS growth expectations are keeping analysts on the sidelines.

Valuation summary

Improved organic sales and better-than-expected earnings have driven PG stock up 15.8% so far this year. The stock is trading at a forward PE multiple 23.1x, which seems high given the projected mid-single-digit growth in its EPS in fiscal 2020.

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