F1Q Follow-Up: The Tide Is Turning

We remain OW PG as brand interventions and recent reinvestment have begun to bear fruit, with FQ1 organic sales growth of 4.0% solidly above the 2.2% consensus and ~3% market expectation and the highest in three years, with broad-based growth across all ten product categories and six regions and 29 of the top 50 category/country combinations holding or gaining share. FQ1 EPS of $2.00 was 6% above the $1.89 consensus. We expect consensus EPS to come down only slightly, which we view as a relative victory in a challenged HPC group facing commodity pressure, as Q1 topline and margin upside should mostly offset higher commodities and taxes within PG's unchanged FY guidance (net sales growth raised to +2% to +4% to reflect the Thorne acquisition). With rebounding topline momentum, we modestly lower FY27 EPS estimates by 1% on cost pressure but raise our price target to $185 from $166 based on ~25x FY28 EPS.