Broker snap: Investec downgrades Unilever to hold

20th Mar 2012 11:02

Investec has cut its recommendation for food and cosmetic goods giant Unilever from buy to hold and cut its target price from 2,170p to 2,100p - the first time it has downgraded the stock in 17 years.While the broker says it is still an admirer of the company, two things are a cause for concern: a) the increased competitive threat from US rival Procter and Gamble; and b) the risk of increased input cost guidance in the face of $125 Brent crude prices and $1,200 palm oil. Meanwhile, the valuation is said to be "not undemanding".Investec has cut its pre-tax profit and earnings per share forecasts for 2012 by around 2%.As for commodities costs, the broker says it fears a 'Groundhog Day' on the input cost guidance front as was the case in 2011, when the company upped its expectations at the end of the first quarter - "with resultant negative impact on forecasts and the share price"."In summary: still believers, but feeling that a return to the pavilion is justified," said analyst Martin Deboo.Shares in Unilever were down 1.48% at 2,058p by 11:14 on Tuesday morning.BC