Morgan Stanley on Procter & Gamble (PG): 'Muted Negative Stock Reaction'
Morgan Stanley analyst Dara Mohsenian reiterated an Overweight rating and $175.00 price target on Procter & Gamble (NYSE: PG).
The analyst comments "Muted Negative Stock Reaction: PG Q2 EPS was relatively in-line (penny EPS beat but 0.6% profit miss), with reiterated FY guidance metrics, but soft flat OSG in FQ2, towards the lower-end of market expectations of 0-1%, but not a big surprise to us (we had cut our OSG forecast to flat in December) or the market with expectations coming down to more flattish recently. OSG was weak yoy, limited by US pressure on a tough comparison to last year's port strikes and continued inventory cuts. Net, fodder in FQ2 both ways for the bear vs bull debate. The FQ2 result is weak on a yoy basis, but the bar was low and there is room for clear sequential OSG improvement in FH2 from a weak FQ2 base. Negative FY EPS revisions should be limited with relatively in-line margin results despite topline weakness. US performance will be key going forward, with easier comparisons and a greater innovation pipeline in key areas, but US promotion is picking back up in the HPC sector and PG still has struggles in some key areas (baby)."
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Shares of Procter & Gamble closed at $146.06 yesterday.