Procter & Gamble’s gains were solid. Why an analyst says your stock is no longer a purchase.

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Procter & Gamble‘s

Apparently, solid financial results may not be enough to keep some investors and analysts bullish on their stocks.

Citigroup lowered shares on Wednesday, the day after the consumer goods maker reported better-than-expected third-quarter fiscal gains. Shares of Procter & Gamble fell one touch in the recent trading, 0.7%, to $ 136.77, in the recent trading. Shares have fallen 1% to date and have risen 15.4% in the last twelve months.

Analyst Wendy Nicholson downgraded its Procter & Gamble (ticker: PG) score to Buy’s Neutral and lowered the target price to $ 150 from $ 165. He noted that the results exceeded expectations. But the company’s projected price increases and other responses to higher input costs made her feel that “in the next two quarters there will likely be incremental pressure and the results could be bumpy,” she wrote.

P&G’s price increases in some of its portfolios will not take effect until September, so commodity inflation will put pressure on the company over the coming months. The company is also facing less favorable foreign exchange rates and difficult comparisons with 2020, when the pandemic boosted sales. Nicholson also warns that some emerging markets in which P&G operates “seem to get worse before they improve,” without having much visibility into a recovery schedule.

These factors could limit the company’s orientation and influence its fiscal outlook for 2022, Nicholson warns.

In addition, although the shares seem relatively cheap: they trade at a premium of 6% over the

S&P 500,

compared to 25% historically, short-term headwinds will prevent this valuation from expanding.

That said, Nicholson still believes the company is a good long-term core stake, adding that it seems well positioned in some key markets and categories. It highlights its strong dividend growth and cash flow, as well as its “magnificent trajectory of innovation and marketing”. But for now, he says it’s safer to wait for him on the sidelines.

Write to Teresa Rivas to [email protected]