Procter & Gamble's (PG) - Get Report stock was downgraded to "hold" from "buy" at Stifel on Wednesday morning due to several negative catalysts, including a strong U.S. dollar, which hit a 14-year high yesterday.
More than half of P&G's sales come from outside the U.S. and a higher dollar makes its products more expensive overseas. In fiscal 2016, North America accounted for 44% of their net sales, while 56% came from Europe, Asia Pacific, Greater China, Latin America and India, the Middle East and Africa.
While Stifel continues to expect a modest sequential improvement in sales growth through fiscal 2017, recent "negative FX movement, moderate anticipated input cost inflation, and continued heightened geopolitical uncertainty limit upside." This will likely result in P&G shares moving within a relatively tight range in the next six to 12 months, according to the analysts.
Stifel continues to anticipate 2% organic sales growth in fiscal 2017 with modest improvement in the two-year compound annual growth rate (CAGR) through the year driven by improving market share trends due largely to reinvestment and innovation.
While the consumer products company continues to anticipate exiting fiscal 2017 with organic sales growth near market growth, Stifel believes it is more likely to begin in fiscal 2018 as P&G benefits from anticipated investment and innovation. The firm also lowered its price target to $86 from $88.
Last week, Deutsche Bank cut its rating on P&G shares to "hold" from "buy" as the firm does not see near-term catalysts over the next few quarters. However, the firm is positive about the company's medium to long-term opportunity.
Jefferies raised its price target on P&G stock to $95 from $93 and maintained its "buy" rating today. The stock is also one of the firm's top investment ideas for 2017. Key tenants of the firm's investment thesis include the company's return to market growth rates of about 3.5% by the end of fiscal 2017, conservative full-year earnings guidance, high earnings visibility and attractive valuation.
Shares of P&G were little changed at $84.65 in mid-morning trading today. The stock is up more than 6% year-to-date. The company's brands include Crest, Dawn, Tide, Bounty, Gillette, Pampers and Olay.