TD Cowen has moved Procter & Gamble (P&G) to a Hold rating, citing an expectation that organic sales will recover only gradually over the next one to two years even as year-over-year comparisons become easier. The analyst house said investor hopes that organic growth, which bottomed at 0% in the second quarter, will reaccelerate materially as pricing relaxes and market share is regained are likely to be disappointed in the near term.
The firm’s forecast assumes organic sales of roughly 2% for fiscal 2026 and fiscal 2027. TD Cowen attributes that restrained outlook to several interrelated factors: muted pricing, an uncertain timeline for regaining competitive positioning, and specific pressure on U.S. Hispanic consumers.
Management has indicated a deliberate push toward affordability as competition intensifies in P&G’s core U.S. markets. That strategy, TD Cowen said, contributes to an environment where pricing is unlikely to be the primary lever for near-term growth. Instead, management has signaled it will emphasize product performance improvements to justify value to shoppers rather than leaning on higher shelf prices.
One consequence of increased affordability and trade-down behaviour among consumers is heavier reliance on promotions to stimulate volume. Promotional sales have expanded by about 270 basis points as a share of revenue, and company leadership has stated an intention to move promotional activity back toward pre-COVID norms. TD Cowen’s model incorporates relatively weak pricing, with average pricing estimated at approximately 0.9% over the coming two years.
Market-share trends have contributed to the cautious stance. TD Cowen noted a weighted market-share decline of 29 basis points over the latest 12-week period and 20 basis points over the last year, with simultaneous softness across multiple categories including laundry, diapers, skin care and deodorants. The firm views these shifts as evidence that regaining competitiveness will be gradual rather than rapid.
TD Cowen also highlighted structural headwinds related to Hispanic consumers in the U.S. The analyst team said tighter U.S. immigration policies could undercut economic confidence among Hispanic households, which tend to be larger and have heavier spending in baby care and household cleaning categories. That dynamic, TD Cowen argued, may complicate efforts to trade consumers up to premium offerings.
On the valuation front, TD Cowen raised its price target for P&G to $156. That target is based on an assumption of approximately 5% earnings growth over the next two years and a forward valuation multiple aligned with current levels but below the company’s five-year average.
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Contextual takeaway - TD Cowen’s downgrade reflects a view that P&G’s path back to stronger organic growth will be slow due to constrained pricing flexibility, elevated promotional intensity and market-share erosion across core categories, with particular vulnerability among Hispanic consumers in the U.S.