Erste Group upgraded Procter & Gamble (NYSE: PG) from Hold to Buy on Tuesday, pointing to the stock's valuation versus industry peers as a supporting factor for the change in stance.
P&G sustained its guidance for the current fiscal year, forecasting revenue growth in a range of 1% to 5% year-over-year off an annual revenue base of $85.26 billion. Management also expects earnings per share growth of between 1% and 6% year-over-year for the full year.
The company has disclosed a shareholder return program totaling $14 billion to $15 billion. Of that total, approximately $10 billion is earmarked for dividends and roughly $4 billion to $5 billion for share repurchases.
Erste Group analyst Hans Engel commented on valuation, saying: "The stock is attractively valued in terms of the P/E ratio compared with the sector as a whole." Data from InvestingPro indicates a current P/E ratio for PG of 23.47, and InvestingPro's Fair Value assessment suggests the shares are slightly undervalued. InvestingPro also provides further analysis and metrics on P&G's financial position in its Pro Research Report.
Earlier this month P&G reported fiscal second-quarter results for 2026 that were mixed. The company posted EPS of $1.88, narrowly topping the consensus estimate of $1.86, while revenue came in at $22.2 billion versus an expected $22.34 billion.
Following the quarterly report, a number of large brokerages updated their views and price targets:
- UBS raised its price target to $170 and kept a Buy rating, attributing the EPS beat in part to favorable SG&A and below-the-line items.
- Wells Fargo set a $165 price target while maintaining an Overweight rating, describing the quarter as meeting a low bar and suggesting potential for improvement in the second half of the year.
- BofA Securities lifted its target to $171, noting that flat organic sales for the quarter met market expectations and that the reiteration of full-year guidance was reassuring.
- JPMorgan upgraded the stock to Overweight from Neutral and increased its price target to $165, citing expectations for stronger organic sales growth and margin expansion going forward.
These analyst moves came despite the uneven nature of the quarterly print - an EPS beat paired with a revenue shortfall - reflecting differing interpretations of P&G's near-term topline momentum and margin trajectory.
From a capital allocation perspective, the announced $14-15 billion return to shareholders combines a sizable dividend commitment with a multi-billion dollar buyback program, signalling management's focus on returning cash while operating within the guidance ranges provided.
Investors and market participants will likely watch upcoming sales trends and margin dynamics closely, given the quarter's mixed signals and the reliance on guidance to support analyst outlooks and higher price targets.