Latest Developments:
Procter & Gamble (PG) reported 1Q25 revenue of $21.7 billion, a 0.61% year-on-year decline, missing estimates by $240 million. The company experienced a net margin drop to 18.22% due to higher non-operating expenses, such as restructuring charges. Despite a challenging consumer environment, organic sales rose by 2%, with sustained growth in the grooming, healthcare, and fabric & homecare segments. PG expects organic sales to grow between 3% to 5% for the year, supported by productivity gains and disinflationary trends.

Investment Case:
Despite macroeconomic challenges, PG's resilience is evident. Organic sales growth and cost optimization are key drivers. Global disinflation and strong retail sales are expected to continue supporting demand for PG’s essential products. Additionally, PG’s focus on under-penetrated markets, such as oral care and fabric enhancers, provides further upside potential. The company’s productivity gains have already improved margins, and a weakening dollar is expected to boost revenues. Valuation analysis suggests an 18% upside, with further growth possible if PG accelerates expansion in key markets.

Valuation:
PG’s implied share price based on conservative estimates is $198.16, indicating an 18% upside from its current price. If the company outperforms in under-penetrated markets and sustains margin improvements, the potential upside could be as high as 30%.

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