Morgan Stanley Sees Greater Headwinds Approaching for Procter & Gamble

In a report published Wednesday, Morgan Stanley analyst Dara Mohsenian reiterated an Equal-Weight rating on The Procter & Gamble Company PG. In the report, Morgan Stanley noted, “PG lowered its FY14 sales and EPS guidance to reflect recent policy announcements by the Venezuelan government which impact foreign exchange rates applied to various transactions (now based on the SICAD rate of 11.4 bolivars per USD vs. the official CADIVI rate of 6.3), as well as other adverse exchange rate movements in Argentina, Turkey, South Africa, Ukraine, and Brazil. Net, FX is now expected to be a 2-3% topline headwind (vs. -2% prior guide) and -9% EPS headwind (vs. -7% prior guide). PG did maintain both its 3-4% organic sales growth and 12-14% core EPS growth targets for FY14. PG also expects to incur one-time charges in the $230-$280M range (or 8-10 cents) due to the revaluing of certain balance sheet items, which will be excluded from core EPS.” The Procter & Gamble Company closed on Tuesday at $78.84.