Danone: RBC downgrades to 'sector perform'

(CercleFinance.com) - On Thursday RBC downgraded Danone shares from 'outperform' to 'sector perform', while maintaining its target price at E73 (cp: E68.
2, -1.4%).

The Canadian broker said that it expects the French food group to maintain its growth momentum, a quality it considers fundamental in the FMCG sector.

While it considered the company's growth target of 3% to 5% to be "realistic", RBC cited valuation issues as the reason for its downgrade.

Over the past year, Danone has been one of the very few companies we cover to demonstrate the qualities traditionally displayed by consumer staples groups, i.e. to generate steady growth by gradually improving its margins, it points out.

We think this is well reflected in its 15% outperformance compared with the sector over the last 12 months, with the stock now trading at a 10% premium to its historical average, it concludes.


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