Procter & Gamble (PG): Share Losses Will Stabilize Over Time - UBS
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UBS analyst, Stephen Powers, reiteated his Buy rating on shares of Procter & Gamble (NYSE: PG) noting that he does not expect the operating environment to improve near-term since new grooming entrants (Harry's/Dollar Shave Club) are committed to increasing their presence in the category (through new distribution points in the case of Harry's, Unilever-funded investments in the case of DSC), intellectual property disputes are still active, and EPC may accelerate investment in its second year of standalone operation.
However, despite these problems, the analyst believes PG has the ability to stabilize share losses over time with selective reinvestments in value innovations, A&P, price, and emerging channels.
The analyst is modeling accelerated organic growth for Grooming in FY17 and FY18 (ultimately to +3.5% from +1.0% in FY16)—we expect ~+150 bps of this growth to be driven annually by improvements in US grooming specifically.
No change to the price target of $96.
Shares of Procter & Gamble closed at $88.66 yesterday.
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