Exane BNP Paribas (OTC:BNPQY) adjusted its outlook on Procter & Gamble (NYSE: NYSE:PG) by increasing the price target to $192 from the previous $180.
The firm maintained its Outperform rating on the stock, signaling confidence in the company's performance despite some market headwinds.
Procter & Gamble, which counts China as its second-largest market, making up less than 10% of its sales, has been facing a challenging retail environment in the region. Retail sales in China for August grew by 2.1% year-over-year, which was slightly lower than the expected 2.5%. Notably, the cosmetics segment saw a decline of 6.1% year-over-year.
The analyst from Exane BNP Paribas noted that the August retail sales in China decelerated from July, which had seen a 2.7% increase and a 6.1% decrease in cosmetics sales, respectively.
The slowdown is consistent with cautious commentary from management across the industry, including companies like Procter & Gamble, Colgate-Palmolive (NYSE:CL), and Coca-Cola (NYSE:KO).
Despite the soft market data from China, the analyst anticipates a mid-single to high-single digit percentage decline in Procter & Gamble's China business for the fiscal first quarter ending in September.
The projection is reportedly in line with what the market has been expecting.
Furthermore, the analyst pointed out that Procter & Gamble's stock is trading at less than 25 times price-to-earnings ratio, which is on par with the household and personal care group average.
In other recent news, Procter & Gamble reported a 4% increase in organic sales growth for the fiscal year 2024, with core earnings per share (EPS) rising by 12% to $6.59. The company's e-commerce sales also saw a 9% increase, now accounting for 18% of total sales.
Despite facing challenges in China, the Middle East, and Argentina, P&G remains committed to its strategies of superiority, productivity, constructive disruption, and an empowered organization to foster future growth.
On a different note, companies worldwide are feeling the impact of China's economic slowdown. Starbucks (NASDAQ:SBUX), General Motors (NYSE:GM), and various technology firms have expressed concerns about the tough Chinese market conditions.
Notably, Apple (NASDAQ:AAPL) reported a steeper-than-expected 6.5% fall in sales in China, which represents a fifth of the company's total revenue.
In response to the slowdown, the Chinese government has introduced consumer-focused stimulus measures. However, analysts, including Quincy Krosby, chief global strategist for LPL Financial (NASDAQ:LPLA), have expressed concerns over the adequacy of these measures to broaden the economic base.
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