Ubs Upgrades Procter & Gamble, Forecasting Nearly 20% Growth

In an interview with UBS, the agency said that the company's recent underperformance over the last few quarters is "unwarranted," and that it is time to buy them. 

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A stock rating upgrade by Peter Grom from neutral to buy has been issued for Procter shares, in line with a raise in his price target to $163 from $157. It is hoped that the new forecast will result in an 18% upside from the close of the market on Tuesday.

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In his note on Tuesday, Grom said that the stock of P&G has been the worst performing stock across our coverage universe for home and personal care products. “Apart from the unwind in the group, we also have concerns about the company's ability to deliver outsized EPS growth or positive revisions in the future,” Grom wrote.   

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According to him, concerns over the latter are misplaced, and he believes an inflection point in earnings is imminent when we move forward to FY24 as we look forward to the future. According to the analyst, Procter shares are trading at slightly less than the average five-year valuation, resulting in an interesting risk-reward dynamic at current levels, so the analyst believes that it is an attractive time to buy.

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Grom stated that he believes the organic revenue growth rate will approach 5% in 2024, as a result of a return to share gains, premiumization and a reopening of China. 

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"We believe that positive revisions to estimates have been a prerequisite for the LC HPC stocks to have been able to rally over the past year, and as such we see upside to consensus estimates looking out to FY24, whereas we believe negative revisions have been a key reason for P&G to lagged YTD," said Grom.

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There has been a significant decline in the value of the shares of P&G for the year 2023, as opposed to a 3.4% increase in the S&P 500. In the premarket trading session on Wednesday, the stock was trading at a higher price by 1.4%.