TD Cowen is moving to the sidelines when it comes to Procter & Gamble . The investment firm downgraded the consumer goods and personal care company to hold from buy. Analyst Robert Moskow did lift his price target to $156 per share from $150, though that only signals upside of 4.4%. Procter & Gamble manufactures brands such as Pantene, Crest, Febreze and Charmin. Moskow believes that for the next year or two, Procter & Gamble’s growth is likely to remain subdued at 2% due in part to affordability issues and pressure on the Hispanic consumer. “After decades of capitalizing on the expansion of the Hispanic population in the U.S. and their growing economic prosperity, we expect new U.S. limitations on immigration to pose a significant challenge for P & G and the HPC sector going forward,” Moskow wrote. PG 1Y mountain PG 1Y chart The analyst noted that, given that Hispanic families are 36% bigger than the average U.S. family, they consume more baby care products. He also highlighted the cultural importance they place on cleaning their homes. “The lingering impact of U.S. immigration policies on their sense of economic security will make it more difficult for P & G’s to trade them up to premium-priced products in the multi-tier price spectrum,” he added. A compounding factor will be Procter & Gamble’s loss of pricing power, which Moskow expects to remain unusually muted as competition and affordability concerns rise. The analyst noted that consumers are trading down in key diaper and laundry categories, while manufacturers are simultaneously increasing sales sold on promotion. “We found it particularly telling on the last earnings call when mgmt said that they will make product performance enhancements to improve the value proposition of their core products rather than justify higher pricing like they have in the past,” he wrote. Moskow also underscored that Procter & Gamble faces an uncertain timeline to reverse market share it lost as consumers shifted to e-commerce channels and using media to evaluate brands. Like other peer companies, Procter & Gamble is in the middle of adopting analytical tools to develop retail consumer insights, he said.
