Procter & Gamble impresses analysts with long-term plans



Procter & Gamble (NYSE:PG) is rated favorably by Wall Street after hosting its biennial analyst day at the Cincinnati headquarters last week.

Morgan Stanley said it believed P&G had indeed explained why the strategy and organizational changes were made over the past decade will continue to drive LT’s outsized growth, especially with supply chain and digital initiatives.

While there was no major financial news announcement on stock moves at the meeting after PG reiterated its short- and long-term guidance, analyst Dara Mohsenian and his team believed that the meeting generally served to highlight the growing efficiency of PG’s organization and supply chain, which results in both greater productivity, as well as the superiority of PG’s products which drives the category growth beyond PG’s share gain.

Mohesnian said P&G management didn’t seem like mergers and acquisitions were a high priority for the company, but the consumer products giant appeared to be focused on maintaining a plan to create constructive disruption and not just resting on the favorable changes of the past decade.

For investors, PG described the obvious near-term headwinds such as pressure on input costs, unfavorable exchange rates, the impact of inflationary pressure on consumers, tight retailer inventories and the impact of COVID lockdowns – but these concerns would be addressed in current guidance. Morgan Stanley sees little near-term EPS upside for P&G from the FY23 guidance, but retains an overweight rating on P&G for the impressive long-term potential.

Wells Fargo also left the P&G meeting constructively over the title. “We believe valuation is reasonable and see opportunity for further multiple expansion given a high degree of earnings visibility,” noted analyst Chris Carey.

On Seeking Alpha, author Bela Lakos said the presentation was strong enough to warrant a repeat buy rating on the title. “P&G aims to limit the number of acquisitions and aims for organic growth. The catalysts for this growth are: portfolio transformation, superiority, improved productivity, constructive disruption and an agile and focused organization,” said Lakos summary about P&G.


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