Procter & Gamble Co (NYSE: PG) has inched down in recent sessions after reporting weaker-than-expected revenue for its third financial quarter.
Still, a Wall Street analyst recommends loading up on P&G shares as much of the downside is already factored into them at current levels.
According to Nik Modi, an RBC senior analyst, the consumer giant could climb all the way back to $177 by the end of this year.
His price target indicates potential upside of about 10% from here.
A healthy 2.63% dividend yield makes P&G stock all the more attractive to own in 2025.
Why is RBC bullish on Procter & Gamble stock?
Citing a consumer slowdown and tariff risks, Procter & Gamble lowered its full-year forecast for profit and revenue last week.
Still, Modi raised his rating on the consumer giant to “outperform” in his recent note, saying the quarter was a “clearing event for PG, materially cutting numbers while protecting investments needed for sustainable long-term growth.”
RBC expects Procter & Gamble to be able to offset some of the potential impact from Trump tariffs with price hikes, which the management said will begin at the start of the company’s next fiscal year.
Versus its year-to-date high in early March, P&G stock is currently down nearly 10%.
RBC’s Modi has confidence in P&G’s leadership team
Modi was not particularly let down by P&G’s Q3 earnings release, as weakness this earnings season was broadly expected.
Procter & Gamble stock looks attractive on the post-earnings decline as its “revised guidance embeds assumptions that are realistic and achievable.”
RBC acknowledged the challenging macroeconomic backdrop in its research note but said the multinational based out of Cincinnati, Ohio, has “the right management team and capabilities” to deal with it.
Note that other Wall Street firms seem to agree with Modi on P&G shares as well, given the consensus rating on the NYSE-listed behemoth currently sits at “overweight”.
Is P&G a suitable pick ahead of a potential recession?
RBC recommends loading up on Procter & Gamble shares on the pullback as it expects P&G to be a “net share gainer going forward.”
Analyst Nik Modi is convinced the consumer goods company will offer more balanced organic growth without having to compromise on profitability moving forward.
P&G’s commitment to innovation and its value messaging were among other reasons that RBC cited for its bullish view on Procter & Gamble last week.
Note that Procter & Gamble stock is an attractive pick ahead of a potential recession as well.
That’s because many of its products are “non-discretionary”, which means people will buy them irrespective of what happens with the economy at large.
The non-discretionary nature leaves P&G with greater pricing power during challenging times as well.
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