Deutsche Bank Downgrades Wimm-Bill-Dann (WBD) to Sell on Valuation

June 15, 2009 5:41 PM EDT

Deutsche Bank downgrades Wimm-Bill-Dann (NYSE: WBD) to Sell.

Deutsche analyst says, "WBD shares are up 137% YTD (vs. 78% for EM dairy peers and 34% for EM beverage comps) and now trade at 20.3x adjusted P/E and 9.7x EV/EBITDA for FY09E, representing 32% and 26% respective premiums to global dairy peers and 43% and 32% premiums to global beverage comps. 1Q09 results could offer positive margin dynamics, but with continued volume declines, no signs of a recovery in Russian consumer trends, and limited scope for market share gains, we view current premiums as unjustified...We do not view company's share buyback positively. We believe the buyback is akin to playing the market with shareholder money and implies WBD does not see any attractive short-term ways to expand the current business. Despite Danone's recent share issuance, we do not feel a WBD takeout is imminent as we have yet to see signs of a willingness to sell from core WBD shareholders. Though fundamental upside seems exhausted, we believe investors interested in exposure to either of these catalysts are better served holding the discounted locals."

Wimm-Bill-Dann Foods OJSC, through its subsidiaries, manufactures food products in Russia. The company offers dairy products, baby food products, juices, water, nectars, and still drinks.

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