(News Bulletin 247) – UBS on Wednesday raised its recommendation on Procter & Gamble from ‘neutral’ to ‘buy’, judging that the stock’s recent underperformance was ‘unjustified’.
In a research note, the analyst points out that the action P&G shows at this stage the worst performance of the sector of maintenance and hygiene products (HPC) since the beginning of the year.
A gap that the intermediary attributes to concerns surrounding the ability of the American group to generate growth and to surprise favorably with its results.
According to UBS, these fears are exaggerated since an inflection point in earnings is looming on the horizon of the financial year 2023/2024, according to him.
The professional thus says he expects a return to organic growth of nearly 5% by 2023/2024 under the effect of market share gains, a move upmarket of the portfolio and the reopening of the Chinese economy.
With the stock trading at 22x its 2023/2024 earnings forecast, versus a historical average of 23x, UBS believes the stock’s risk/reward profile is currently attractive.
His new price target of $163, up from $157 so far, shows 18% upside potential.
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