Why BofA Just Cut Its Price Target on PG Stock — And Why It Still Says “Buy”

For the majority of the past century, Procter & Gamble has been the type of stock that seldom makes people’s hearts race. Tuesday’s closing price was $142.85, up just 0.37% for the day. The current market capitalization is $332 billion. The P/E ratio is a respectable 21. Nothing about that makes a headline. And yet here we are, the day before earnings, with a new CEO in the corner office, analysts discreetly updating their models, and a commodity called resin appearing in practically every stock research note.

You can’t really avoid P&G if you walk through any Target or Walmart in the United States. One aisle of tide. The next is Pampers. Gillette at the conclusion of the shaving process. Old Spice, Bounty, Crest, and Charmin. Since 1837, the company has been quietly present in American homes, predating the majority of states west of the Mississippi. The stock may have dropped from its 52-week high of $170.99 to the current $142.85 without much fanfare because of this kind of durability, which fosters a certain complacency among investors. It’s declining, but not significantly. Not broken, but bruised.

The price of resin is currently bothering analysts. It sounds almost uninteresting until you realize that Crest tubes, Tide bottles, and Pampers diapers are all made of resin. Earlier this month, BofA lowered its price target from $171 to $167, citing increased anticipated resin costs through fiscal 2027. Deutsche Bank reduced it to $162. With an equal-weight rating, Barclays fell all the way to $146. The current value of JPMorgan is $162. With a purchase, Jefferies is still at $175. RBC continues to outperform at $167. The range reveals a lot. With twelve purchases, ten holds, and twenty-two brokerages covering the stock, the average target remains well above the current price of roughly $162.79.

The mood in the near future will likely be determined by Friday’s earnings. On about $20.54 billion in revenue, analysts anticipate an EPS of $1.56. P&G managed $22.21 billion and slightly outperformed EPS in the most recent quarter, a pattern the company has been repeating almost monotonously for years. However, organic sales growth is predicted to be between 1.6% and 1.9%, which is hardly the kind of figure that thrills a market that is eager for expansion. Investors seem to want more than stability. They want an explanation for why they think the upcoming decade will be different from the previous one.

Shailesh Jejurikar may be a contributing factor. On January 1, he succeeded the long-serving Jon Moeller, who had been appointed Executive Chairman, as President and CEO. At a company this size, changes seldom have an immediate impact. However, as this develops, it’s difficult to avoid wondering if a new leader who spent years managing P&G’s fabric and home care divisions will put more pressure on pricing, portfolio trimming, and the slower-moving categories that have been a drag. Or if a $332 billion organization’s bureaucracy simply consumes the person in the chair.

Meanwhile, the dividend story continues to do what it has always done. Earlier this month, the board approved a 3% increase to $1.0885 per quarter. This results in a yield of 3.05% and an annualized payout of $4.35. This is practically a religious issue for dividend-focused funds and retirees. P&G has increased its dividend for so many years in a row that it now uses this trend as a marketing tool. The dull predictability might become appealing once more in a year when tech multiples eventually normalize and investors rediscover defensive names. Defensive sectors have been quietly outperforming for weeks, and some of the Street’s chief economists believe that the likelihood of a recession is increasing.

This earnings cycle feels more like a mood test than a fundamental story, and it’s difficult to ignore. The business is doing well. Growth is slow. Expenses are actual. The brands are still the brands. To be honest, your beliefs about consumer behavior and commodity prices over the next 12 months will determine whether PG stock is a steal at $142 or a slowly declining incumbent. The market will let us know which way it is leaning on Friday morning.