01:42 PM EDT, 07/31/2024 (MT Newswires) -- Procter & Gamble ( PG ) is managing the challenging market well, but is facing headwinds in Greater China and the Middle East that are expected to weigh on H1 performance, RBC Capital Markets said in a note Wednesday.

The company's organic sales in China declined by 8% in fiscal Q4, with SK-II brand sentiment issues contributing to the drop, RBC said. In the Middle East, volume trends have remained soft as Western brands remain out of favor, according to the note.

RBC said management is expecting H1 performance to be similar to fiscal Q4, which saw the company posting revenue miss.

Despite this, the company posted strong volume growth in key markets and its gross margin expanded primarily due to productivity gains, favorable commodity costs and pricing, according to the note.

"We think [Procter & Gamble ( PG )] is navigating the challenging environment well, especially as several of its competitors experience improving trends as a result of their own turnaround efforts," RBC said.

RBC raised its price target on Procter & Gamble's ( PG ) stock to $164 from $157 and reiterated its sector perform rating.

Price: 161.62, Change: -0.08, Percent Change: -0.05