Procter & Gamble’s revenues were solid. Why an analyst says his shares are no longer a buy.

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Procter & Gamble‘s

solid financial results are apparently not enough to keep some investors and analysts optimistic about its stocks.

Citigroup cut its shares on Wednesday, the day after the consumer products producer reported better-than-expected fiscal results for the third quarter. The Procter & Gamble stock was slightly lower in recent trading, falling 0.7% to $ 136.77 in recent trading. Shares are down 1% so far and are up 15.4% in the last 12 months.

Analyst Wendy Nicholson downgraded her rating on Procter & Gamble (ticker: PG) from Buy to Neutral and lowered her target price from $ 165 to $ 150. She noted that the results were above expectations. But the company’s planned price increases and other responses to higher input costs made her feel that “the next few quarters are likely to be under increasing pressure and results could be bumpy,” she wrote.

P & G’s price increases on part of its portfolio won’t take effect until September, so commodity inflation will put pressure on the company in the coming months. The company is also facing less favorable exchange rates and difficult comparisons to 2020, when the pandemic boosted sales. Nicholson also warns that some of the emerging markets in which P&G operates “appear to get worse before they get better,” without much insight into a recovery timeline.

These factors could limit the company’s outlook and weigh on its fiscal 2022 outlook, Nicholson warns.

In addition, while the shares look relatively cheap – traded at a 6% premium over the

S&P 500,

compared to 25% historically – short-term headwinds will likely prevent that valuation from rising.

That said, Nicholson still believes the company is a good long-term core holding, adding that it looks well positioned in a number of key markets and categories. She emphasizes her strong dividend growth and cash flow, as well as her “excellent track record in innovation and marketing.” But for now, she says it’s safer to wait on the sidelines.

Write to Teresa Rivas at [email protected]