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Wolfe Research says buy Procter & Gamble, a defensive name as investors ‘flee to safety’

Investors should consider putting their money in Procter & Gamble amid the ongoing search for safety in this difficult macro climate, according to Wolfe Research. Analyst Greg Badishkanian initiated coverage of the consumer staple stock with an outperform rating and a $156 price target. He said in a note to clients Monday that the company is well positioned to weather this environment and improvements to its supply chain should drive growth ahead. “P & G’s brand portfolio has delivered strong demand elasticities to date as they innovate and reinvest in the brands,” he said. “We view their geographic exposure and balance sheet as defensive, which should support fund flows as investors flee to safety.” Badishkanian said Procter & Gamble’s overexposure to the U.S. should also protect it from a worsening macro picture in developing countries, believing demand could hold up better than initially anticipated. “We believe P & G’s demand elasticities will likely hold better than most as they have streamlined their portfolio and re-invested in their top performing brands (Tide, Gillette, Pampers, etc),” Badishkanian wrote. “We view Gillette’s competitive environment to be favorable as smaller start-ups (Dollar Shave Club and Harry’s) are now focused on profitability, while Tide will likely need a few more quarters to recover from its self-inflicted wounds.” Shares of Procter & Gamble have slumped nearly 12% this year. Wolfe Research’s price target implies an 8% upside from Monday’s close. The stock rose marginally higher before the bell Tuesday. — CNBC’s Michael Bloom contributed reporting

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