Procter & Gamble (PG) pushed higher in early trading on Friday after JPMorgan upgraded the household products giant to an Overweight rating after having it slotted at Neutral.
Analyst Andrea Teixeira and her team believe the company is poised to accelerate organic sales growth, improve margin rates in the medium term, and see re-rating back to historical valuation multiples.
“We believe there is upside to consensus longer term as categories are recovering growth in the U.S. We believe PG will regain market share given its strong brand equity, marketing capabilities, and supply chain excellence/resilience positively in the current operating environment,” wrote Texeira.
While cognizant of the slump in consumption, especially in the developed markets, the firm thinks intervention from P&G (PG) management will play a large role in the top line since the company tends to perform ahead of the market given its robust innovation. “Furthermore, PG plays in everyday essentials categories, alluding to consumers returning eventually, and PG remains one of the higher-quality names among our HPC coverage,” updated Texeira.
JPMorgan assigned a price target of $165 to P&G (PG) based on a 50-50 blend of a P/E multiple of 23.1X and an EV/EBITDA multiple of 15.0X.
Shares of Procter & Gamble (PG) were up 1.2% in premarket trading after rising 2.7% yesterday on the heels of its FQ2 earnings report.