Citi Downgrades GROUPE DANONE (GDNNY) to Hold
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Citi downgrades GROUPE DANONE (OTC: GDNNY) from Buy to Hold.
Citi analyst says, "Look beyond France. Private label is increasing share, at an accelerating rate, across continental Europe. The consumer is awakening to new financial realities and is quickly adjusting behaviour. Sector earnings risk is to the downside...Across a wide selection of Food and HPC categories, the largest private label share gains are in yoghurt and drinking yoghurt. This impact is being exacerbated by Danone pricing ahead of the market in nearly all markets/categories...We could justify maintenance of our existing earnings estimates, but only with continued and accelerating volume declines. We believe this is something that Danone will not tolerate; it will take action, but doing so will come at a cost: 1% of price equates to 7% of EBITA and 9% of earnings...Notwithstanding this, given the relatively poor and uncertain outlook, we suspect that share price salvation will be some time in coming."
Groupe Danone SA is a France-based company engaged in the food processing sector.
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