Procter & Gamble surges as JPMorgan upgrade sparks second-half optimism
Analyst sees shares climbing 11% on accelerating organic sales growth and margin expansion potential
Procter & Gamble shares jumped more than 2.6% on Friday after JPMorgan upgraded the consumer goods giant to Overweight, citing confidence that the company is poised for accelerating growth in the second half of its fiscal year.
The bank raised its price target to $165 from $157, representing roughly 11% upside from Thursday's closing price of $149.93. The upgrade comes just one day after P&G reported fiscal second-quarter results that showed a modest sales beat but flat organic growth, prompting management to reaffirm its full-year guidance.
Analyst Andrea Teixeira wrote that Procter & Gamble is "poised to accelerate organic sales growth, improve margins in the medium term, and hence will likely re-rate back to historical valuation multiples." The firm expects organic sales growth to improve from being flat in the fiscal second quarter to approximately 2-3% in the second half of the fiscal year.
The upgrade adds to bullish sentiment from other analysts. Bank of Americas Securities also raised its price target on P&G to $171 from $170 on Friday, maintaining a Buy rating, according to analyst commentary reported by Investing.com. The consensus analyst target price now stands at $165.32, with 15 analysts rating the stock a Buy or Strong Buy against nine Hold ratings and no Sell recommendations.
P&G's fiscal second-quarter results, released Thursday, revealed a company navigating a challenging consumer environment. Net sales increased 1% to $22.2 billion, while organic sales remained unchanged year-over-year. Core earnings per share of $1.88 narrowly beat analyst expectations of $1.86, though diluted net earnings per share declined 5% from the prior year.
Chief Financial Officer Andre Schulten characterized the second quarter as the "softest quarter of the fiscal year" during Thursday's earnings call, citing headwinds in the U.S. market and difficult comparisons with the previous year. Despite these challenges, management maintained its full-year guidance for organic sales growth of 0% to 4% and core earnings per share growth of 0% to 4%.
The anticipated second-half acceleration will depend on several key factors. P&G executives pointed to easier year-over-year comparisons and sequential improvements in North American consumption data. Geographic performance in the second quarter showed strength in emerging markets, with Latin America organic sales up 8% and the Europe Enterprise region increasing 6%.
Seven out of ten product categories either held or grew organic sales during the quarter. Management highlighted ongoing strength in personal care and expressed confidence that underperforming U.S. categories, including baby and family care, would improve in the second half. Continued contributions from Greater China markets were also cited as growth drivers.
The stock's Friday advance extends a recent recovery pattern. Shares remain below their 52-week high of $176.39 reached last year but have bounced off the October low of $137.62. With a market capitalization of $342 billion, P&G currently trades at a price-to-earnings ratio of 21.3, slightly below its five-year average, and offers a dividend yield of 2.8%.
The broader consumer staples sector has faced pressure in recent months, underperforming as investors have rotated toward AI-driven growth stocks. The sector declined 0.88% in the fourth quarter of 2025 and struggled early in 2026. Analysts have noted that increasing adoption of GLP-1 weight-loss drugs could reduce spending on certain food and beverage categories, while consumers remain focused on value.
Yet P&G's defensive characteristics—including its diversified portfolio across beauty, grooming, healthcare, and household products—have traditionally made it a favored holding during periods of economic uncertainty. The company's return on equity of 31.9% and operating margin of 27.6% rank among the strongest in the consumer staples sector.
Chief Executive Officer Shailesh Jejurikar expressed confidence in the company's strategy despite the challenging environment, stating that P&G remains "on track to deliver within our fiscal year guidance ranges" and emphasizing a commitment to an "integrated growth strategy" aimed at "reinventing P&G and creating the CPG company of the future."
The second-half turnaround will be critical for P&G to maintain its premium valuation. With JPMorgan forecasting a return to historical multiples and expecting margin expansion to drive earnings growth, investors will be watching closely for signs of the acceleration management has promised when third-quarter results arrive in the coming months.