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Alan Farley
PG

Dow component Procter & Gamble Co. (PG) broke out to an all-time high last week after beating top and bottom line Q4 2020 estimates and guiding fiscal year 2021 earnings-per-share (EPS) above consensus. The household goods giant reported a profit of $1.16 per-share on a 3.5% year-over-year revenue increase to $17.7 billion, underpinned by strong demand for household cleaning, personal health, and cleansing products in the U.S.A. and China.

Procter & Gamble Higher Sales Due To Pandemic

Organic sales rose 6% during the quarter, with the home care segment that includes Tide and Comet cleaning products reporting impressive 14% year-over-year growth. Procter & Gamble’s health care segment lagged badly, booking sales of just 2% after Crest and Oral-B products generated limp growth as a result of retail, electronic, and dental office closures. The company also noted single-digit declines in Gillette and Venus products, insisting that many customers are shaving less often as a result of the pandemic.

CEO David Taylor discussed strong tailwinds in a post-release interview, predicting “there may be a long-term increase focused on the home — more time at home, more meals at home — with related consumption impacts.” However, COO Jon Moeller followed up Taylor’s upbeat commentary, warning the pandemic will dictate trends in the next two years, stating “we’ll likely be operating without a vaccine or advanced therapeutics through fiscal 2021”.

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Wall Street And Technical Outlook

Wall Street consensus rates the stock as a ‘Moderate Buy’ based upon 8 ‘Buy’ and 3 ‘Hold’ rankings. No analysts are recommending that shareholders sell their positions and move to the sidelines at this time.  Price targets currently range from a low of $125 to a street-high $153 while the stock has opened Wednesday’s U.S. session about $8 below the median $142 target. This placement suggests that additional gains are likely in coming weeks.

Proctor & Gamble is trading at an all-time high in the 130s after breaking out above the February 2020 high. However, accumulation readings have failed to match bullish price action and are slumping just above the midpoint of the major distribution wave posted between February and June.  In turn, this predicts the rally will stall soon and ease into a holding pattern that tests new support before yielding sizable upside, or a failed breakout.

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