Procter & Gamble’s gains were solid. Why an analyst says his stock is no longer bought.

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Procter & GambleS

it seems that sound financial results would not be enough to keep some investors and analysts growing on its shares.

Citigroup downgraded the stock on Wednesday, the day after the consumer goods maker reported better-than-expected third-quarter tax gains. Procter & Gamble shares were slightly lower in recent transactions, down 0.7% to $ 136.77 in recent trading. Shares have fallen by 1% so far and increased by 15.4% in the last 12 months.

Analyst Wendy Nicholson downgraded Procter & Gamble (ticker: PG) to Buy Neutral and lowered its target price to $ 150 from $ 165. She noted that the results were beyond expectations. But the company’s planned price increase and other responses to higher entry costs have left her feeling that “the next few quarters are likely to have incremental pressures and the results could be bumpy,” she wrote.

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

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

Moreover, while the shares seem relatively cheap – trading at a premium of 6% compared to

S&P 500,

compared to 25% historically – short-term headwinds are likely to prevent this assessment from expanding.

That being said, Nicholson still believes the company is a good long-term holding company, adding that it seems well positioned in some key markets and categories. It highlights the strong increase in dividends and cash flow, as well as the “extraordinary track record of innovation and marketing”. But for now, she says it’s safer to wait on the sidelines.

Write to Teresa Rivas la teresa.rivas@barrons.com