Broker snap: Jefferies keeps underperform rating for PZ Cussons

27th Mar 2012 10:42

Jefferies has maintained its negative stance on cosmetic production group PZ Cussons following the group's profit warning this morning.The firm, which makes Imperial Leather soap, has warned the impact of economic and social tensions in its largest market of Nigeria would be significant, resulting in overall performance being some way below expectations. Furthermore, the removal of the fuel duty subsidy in January has led to lower consumer disposable income, higher transport costs and port disruption which have adversely affected sales and costs during the period."Being the second profit warning since November, we expect pressure on the shares, which are trading at the princely valuation of 20.5x calendarised FY-12 PE," Jefferies said. This is a 20% premium to sector peer Unilever.The broker expects full-year earnings per share consensus forecasts to be cut by around 10% as a result of this announcement.Jefferies retains its underperform rating and 260p target price for PZ Cussons.Shares had dropped 9.61% to 302p in mid-morning trade in London.BC