"Two-speed performance continues" at Unilever, says Canaccord

24th Jul 2014 11:12

Canaccord Genuity has recommended investors to 'hold' shares of Unilever, saying that a "two-speed performance continues" at the consumer good company."Interim results, while slightly ahead of consensus at the earnings per share (EPS) level (€0.78 versus consensus of €0.74), are notable for a further weakening in volumes relative to our own and market expectations," the broker said.Sales growth was just 3.8% in the second quarter, below the 4.3% forecast, with volumes up 1.9%, compared with the 2.4% estimate.The broker said that trends were "familiar" but there was "further polarisation" with a strong performance from the Home & Personal Care division and emerging markets offsetting weakness elsewhere."While some 66% of Unilever's products are gaining share, the market slowdown is more than offsetting this."With the company not expecting a material improvement in conditions for "several quarters", Canaccord said that the market is like to trim its forecasts for Unilever in the short term and EPS will likely be flat this year."Valuation remains relatively stretched and we see no diminution in the intensely competitive environment; nevertheless we see insufficient share price downside to warrant a more negative recommendation."The stock was down 0.2% at 2,678p by 11:11, having mostly erased earlier losses.BC