Date: Thursday 21 Jun 2012
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.
"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.
"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."
Jefferies has maintained an 'underperform' rating and 680p target price for advertising and media giant WPP following Wednesday's acquisition of AKQA, saying that questions still remain over the extent of the company's digital organic growth.
In the first quarter, WPP's digital organic growth rate was around 8%, whilst peers were grown by 15% in this region. "In our view, the transaction is likely aimed at addressing underperformance in digital organic growth."
Merchant Securities has initiated coverage of Micro Focus International with a 'buy' rating and 530p target price, saying that the group knows 'how to put cash to good work'.
"Management have not been tied to growth targets, which we think sensible. In our view the cash generation (and efficient return) supports the valuation.
"We would ultimately not be surprised by a return of private equity interest, but view the stock as a strong defensive in a tricky market," Phillips said.
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