Broker snap: Unilever preferred to AB Foods

9th Jul 2009 12:53

Primark remains the main engine of growth at Associated British Foods as all other parts of the business reported slowing sales growth in the third quarter of the group's financial year.Jeremy Batstone-Carr at Charles Stanley said the trading update was broadly in line with expectations and "reasonably upbeat" but he still advocates selling the shares."The cautious comment relating to little growth in full year earnings is likely to limit the scope for a favourable share price reaction in the wake of outperformance against the sector over calendar Q2," Batstone-Carr believes.The broker reckons there is "better scope for outperformance" elsewhere in the sector over the half-year reporting season, and suggests clients switch into Unilever ahead of the Anglo-Dutch household goods giant's second quarter update on 6 August.Graham Jones at Panmure Gordon is a fan of Associated British Foods, however, and believes the trading statement supports his view of a return to strong earnings growth next year.The broker has raised its price target from 790p to 810p on expectations of solid growth in the Retail and Sugar businesses and a better performance in Grocery.