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Why Wells Fargo Upgraded Procter & Gamble Stock

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PG upgraded to “outperform”

On April 8, Procter & Gamble (PG) stock was up about 1% in the pre-market session after Wells Fargo upgraded the stock. Wells Fargo upgraded its rating on Procter & Gamble stock to “outperform” from “market perform” and raised the target price to $115 from $91 per share. The new target price indicates an upside of about 11% from its closing price of $103.75 on April 5.

Procter & Gamble impressed investors with its consistent financial performance in the first half of fiscal 2019. Procter & Gamble’s organic sales rose by 4% in the first half driven by higher pricing and improvement in volumes. Meanwhile, its bottom line exceeded analysts’ estimates thanks to the momentum in underlying sales, productivity savings, a lower effective tax rate, and share repurchases.

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Rating and target price summary

Among the 25 analysts covering Procter & Gamble stock, 15 analysts suggest a “hold,” and ten analysts have a “buy” recommendation. Analysts have a target price of $99.93 per share on Procter & Gamble stock, which implies a downside of 3.6% based on its closing price of $103.65 on April 5.

Analysts also remain on the sidelines about the company’s peers including Colgate-Palmolive (CL), Kimberly-Clark (KMB), Clorox (CLX), and Church & Dwight (CHD). The expected slowdown in sales and earnings due to adverse currency rates, cost headwinds, and a higher tax rate compared to the prior year are likely to limit the upside.

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