Procter & Gamble Faces Challenges From Strong Dollar & Inflation, Says Analyst

Raymond James analyst Olivia Tong reiterated an Outperform rating on the shares of Procter & Gamble Co PG and lowered the price target to $155 from $175.
The analyst also lowered her Q1, and FY23 EPS estimates to $1.54 and $5.75, respectively, as solid pricing and improved efficiencies are more than offset by a stronger U.S. dollar, cost pressures, and continued China lockdowns.
Aside from still elevated commodity and transportation cost pressures, estimated at $2.4 billion after-tax for FY23, Q1 will include a few challenges for the company, including worsening FX, softening sell-in, supply chain constraints in some products and China lockdowns, weighing most heavily on Beauty, specifically the SK-II brand.
But even with the challenges, Tong thinks Procter’s pricing power has held strong, supported by steady brand support and innovation and a price-laddered portfolio.
The analyst added that optimizing product formulations and more tactical promotions are likely to help offset cost challenges and manage softening demand trends.
The company is expected to report earnings on October 19.
Also Read: Kraft Heinz Analyst Projects Gross Margin Inflection Ahead, Says Company Now Structurally Better Positioned
Price Action: PG shares are trading higher by 0.23% at $124.51 on the last check Wednesday.
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