Broker snap: JPMorgan downgrades Unilever to 'neutral'

6th Aug 2013 10:28

JPMorgan Cazenove has downgraded its rating for consumer products giant Unilever from 'overweight' to 'neutral', saying that earnings downside still persists."Despite the slide in earnings year to date we see further earnings risks at Unilever, as the market has yet to factor in a slower top line growth and muted margin rise as management reinvests to grow. "Top line should not only bear the brunt of cyclically lower inflation, but Unilever's market share gain success story is loosing steam while competition is heating up."JPMorgan thinks that after best-in-class top-line growth in 2012, like-for-like growth could disappoint this year as the market readjusts to a run rate of around 5.0% (its own forecast is 4.7%).The broker said it sees specific weaknesses in growth drivers: market share losses in Western Europe/USA; rising competition; negative/softening pricing across categories; and slowing emerging markets.JPMorgan has cut its target price for Unilever from 2850p to 2,600p.The stock was down 1.15% at 2,666p by 10:43.BC