Analysts at Bernstein Research upgraded the consumer goods maker to outperform from market perform, and raised their price target on the stock to $72 from $69, following P&G's better-than-expected fourth-quarter earnings report on Friday. Bernstein analyst Ali Dibadj conceded that while he's been critical of P&G's "poor" performance of late, he is coming around to management's realization that "it needs to conduct a sizeable restructuring to help fund its now appropriate (we believe) expansion strategy."
He expects between $2 billion and $5 billion in restructuring over the coming years. "Of course, there is no certainty as to whether P&G will address its 'Several Billion Dollar Opportunity' in terms of costs or do so with as much alacrity or ambition as we would like, but we do believe that the conditions/probabilities are right, now more than ever, for the company to go after it," Dibadj noted.
P&G cautioned in February that it would raise prices this year to help offset at least $1 billion in increased commodity costs. In April, P&G outlined those price increases for a roster of household consumer goods including Pampers diapers, Charmin toilet paper and Bounty paper towels. P&G, also the maker of Tide, Iams, Crest and the Nyquil brands of consumer goods, among many others, already had raised the prices consumers pay on laundry and fabric-care products, as well as Duracell batteries. Consumer foods and goods makers from General Mills and Starbucks ( SBUX) to Kimberly-Clark and Energizer ( ENR) have all resorted to price increases as higher commodity costs pressure margins. -- Written by Miriam Marcus Reimer in New York. >To contact the writer of this article, click here: Miriam Reimer. >To follow the writer on Twitter, go to http://twitter.com/miriamsmarket. >To submit a news tip, send an email to: email@example.com.