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UBS Upgrades Procter & Gamble (PG) to Buy; Positive Risk/Reward

July 14, 2016 7:11 AM EDT
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Price: $162.61 +1.28%

Rating Summary:
    17 Buy, 19 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 6 | Down: 3 | New: 1
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UBS upgraded Procter & Gamble (NYSE: PG) from Neutral to Buy with a price target of $96.00 (from $85.00), saying moving parts falling into place.

Analyst Stephen Powers commented, "Over the past 6 months, PG has been making changes that we have long been looking for - (a) progressively signalling a willingness to reinvest, (b) positioning market-shareneutral (or better) growth as a defining measure of success, (c) acknowledging a need to improve agility while establishing an accountability cultureā€¦all while maintaining its recent productivity focus. Have recent results implied that any inflection in performance will be quick or decisive? No. However, the market seems skeptical that success will come at all, which we see as overly pessimistic. PG remains under-owned by active managers, has persistently lagged key benchmarks, and trades at an attractive discount to peers - even as organic growth seems likely to have bottomed and still-relatively-new CEO David Taylor prepares his first full-year guide. In our view, if PG lumbers along at +1-2% organic growth over the next year, no harm done (barring sector-wide valuation risk). But if it achieves +3% in any of the next 4 quarters, it could well become a name that investors have to again own as the valuation discount versus peers narrows (rerating from 20x FY18E EPS to 22x). Positive risk/reward, upgrade from Neutral to Buy."

For an analyst ratings summary and ratings history on Procter & Gamble click here. For more ratings news on Procter & Gamble click here.

Shares of Procter & Gamble closed at $85.89 yesterday.



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