Investing.com — HSBC downgraded Procter & Gamble to “Hold” from “Buy” and cut its price target to $149 from $182, saying the consumer goods giant’s reinvestment in marketing and innovation has yet to translate into stronger sales volumes or margin recovery despite continued spending.
The brokerage said P&G’s fiscal fourth-quarter results highlighted slowing underlying momentum, with organic sales flat year-on-year after growing 3% in the previous quarter. While quarterly revenue of $21.2 billion broadly matched expectations and adjusted earnings per share of $1.43 slightly beat consensus, adjusted operating income missed estimates as higher selling and marketing expenses offset productivity gains.
HSBC said the weak organic sales performance marked a reversal in the volume recovery that had supported its previous bullish stance. Management attributed the slowdown partly to retailer inventory reductions and the timing of Amazon Prime Day, but the brokerage said the results suggest a return to consistent growth is taking longer than expected.
For fiscal 2027, P&G forecast both reported and organic sales growth of 1% to 3%, with core earnings per share expected to range from flat to up 3%, reflecting higher raw material, energy and transportation costs as well as increased interest expense and foreign exchange headwinds. The company also expects to return about $10 billion through dividends and repurchase roughly $5 billion of shares during the year.
HSBC lowered its fiscal 2027-2029 earnings estimates and reduced its valuation multiples, saying the shares now trade close to their historical averages, leaving limited scope for multiple expansion until the company’s reinvestment strategy delivers sustained volume growth and margin improvement.
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