Date: Thursday 21 Jun 2012
LONDON (ShareCast) - Investec has labelled consumer goods giant Unilever a 'warm hold', saying that while upside to the share price is limited, the company is better-placed than struggling peers Proctor and Gamble and Danone.
Both P&G and Danone have announced profit warnings recently, sending stocks lower across the sector, including Unilever. However, Investec highlights that Unilever is not like these companies.
"While P&G and Danone’s profit warnings serve to remind that this is not a time for complacency, we counsel against too much read-across," the broker said.
Analysts explain that Danone in particular was surprised by commodity inflation; this was primarily dairy-related. "Over at Unilever, we think that commodity inflation is getting better, no worse" - the broker's commodity basket index for the company is now falling at its fastest rate since late 2008.
Meanwhile, while Spain and China are big markets for Danone and P&G, respectively, they account for just 1.5% and 2-3% of sales for Unilever.
"For us, ULVR is a company that is gaining momentum rather than losing it, whose input pressures are getting better rather than worse, who is relatively less exposed to slowing geographies and who is less of a hostage to guidance fortune.
"We upgrade our numbers to reflect the improved commodity outlook but struggle to rationalise a price target of more than 2,160p [up from 2,100p previously] for the plc. That makes Unilever a warm 'hold' for us."
Shares were trading 0.39% higher at 2,070p.
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|% Change||-0.08 %|
|52 Week High||2,885.00|
|52 Week Low||2,319.00|
|Time||Volume / Share Price|
|12:06||300 @ 2,391.00p|
|12:04||200 @ 2,390.82p|
|12:04||147 @ 2,391.70p|
|12:03||376 @ 2,391.00p|
|12:03||206 @ 2,391.00p|
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