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Analyst Predicts Big Year for P&G in 2011

EPS gain expected to hit double digits.

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By: TOM BRANNA

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The new year hasn’t arrived yet, but analysts have turned the page to 2011. That’s good news for soapers, who have had to endure months of pricing pressures that have eroded margins. But at least P&G can expect a return to double-digit EPS growth in 2011, according to a note published by Goldman Sachs today.


Analyst Andrew Sawyer upgraded P&G shares to Buy and raised his price target by $4 to $75, arguing that the consumer products should see an inflection point as it begins to reap a return on its investments in emerging markets, advertising and lowered price points from the past two years.
Sales should accelerate, Sawyer wrote, with U.S. growth picking up by 100 basis points to 2%.

His fiscal 2012 EPS estimate is 2% to 3% above consensus, and he forecasts P&G can grow sales 50 to 100 basis points faster than consensus. Consensus, Sawyer wrote, underestimates emerging market’s growth.
“The opportunity is enormous. Category sales can grow 8%/year for four more decades on rising incomes,” he wrote.

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