Barclays downgrades Unilever after recent outperformance

23rd Jan 2017 14:48

(ShareCast News) - Analysts at Barclays downgraded their recommendation and target price on the shares of global consumer goods giant Unilever.They lauded the company´s agility and demonstrated ability to combine global scale with local market knowledge, which had resulted in market share gains and improved margins across the majority of its businesses.Nonetheless, the shares' recent sector outperformance, together with uncertainties around trading in emerging markets and currency trends in the developing world and a need to hike prices further to offset oil price gains, "all warrant a more near-term cautious stance", the broker said.So while at a calendar year 2017 price-to-earnings multiple of 19.2 the valuation was not "particularly demanding", Barclays saw greater optionality and scope for positive catalysts or perception change elsewhere in the Staples sector.Hence Barclays´s decision to downgrade its recommendation on the stock from 'Overweight' to 'Equalweight' and reduction in its target price from 3,950p to 3,565p.Longer-term, the broker said the company remained a story of margin self-help, scale and ability to withstand the threats posed by weakening barries to entry in Food and Home and Personal Care.