Procter & Gamble faces muted fiscal Q2, UBS analysts see recovery in second half

Procter & Gamble Co (NYSE:PG, XETRA:PRG) (P&G) is expected to post a softer fiscal second quarter, according to UBS analysts, who see a more constructive setup later in the year as industry conditions improve.

UBS projects earnings per share (EPS) of $1.84, $0.03 below the Wall Street consensus. 

UBS expects organic revenue growth in the quarter to be subdued, with the firm modeling flat organic growth compared with Street expectations of roughly 0.3%. The analysts estimate this will be driven by a roughly 1.1% decline in volumes, offset by about 1.1% from pricing and mix. They pointed to moderating US trends and lingering near-term headwinds, including the lapping of port strike impacts, as factors weighing on the quarter.

The firm noted that investor sentiment around the stock has become more mixed than usual, reflecting debate over whether recent top-line weakness is cyclical or a signal of more persistent pressure.

“A tough quarter expected, but a better setup ahead,” UBS wrote, adding that they do not expect the upcoming earnings release to act as a major catalyst for the shares.

“Looking ahead to next week, we do not think the print will be a meaningful catalyst in either direction,” the analysts wrote, noting that muted organic growth and some moderation to full-year expectations are largely anticipated by the market.

Further, UBS believes that the broader industry backdrop could become more supportive in the second half of fiscal 2026. “As we look out to H2 fiscal year 2026, we believe there is a credible path to improving organic growth as the industry laps weaker demand/retailer destocking,” the analysts wrote, highlighting that recent organic growth concerns are not unique to P&G.

On guidance, UBS expects P&G to maintain its fiscal 2026 earnings outlook but potentially narrow its organic sales growth range. The company currently guides to flat to 4% organic revenue growth for the year, and UBS said the high end of that range appears less likely after a more challenging first half.

For the full year, the firm forecasts organic sales growth of 1.7%, in line with the Street consensus, and fiscal 2026 EPS of $6.95, slightly below the consensus and near the midpoint of P&G’s implied guidance range.

UBS maintained its ‘Buy’ rating and $161 price target on the stock, citing valuation support despite a recent rally in consumer staples. This implies upside from current levels of about $145.

“When layering in the fact that relative valuation is still somewhat attractive even after the recent Staples rally to start 2026, we think the risk/reward continues to skew to the upside,” the analysts said.

P&G will hand down its fiscal Q2 earnings on January 22 before markets open.