On Thursday, UBS reaffirmed its positive stance on Danone SA (BN:FP) (OTC: OTC:) stock, maintaining a Buy rating and a price target of EUR72.00. The firm anticipates that Danone will disclose its third-quarter trading update on October 24th, with expectations of a 4.1% Like for Like (LFL) sales growth. This projection aligns with the company's first-half performance.
The forecast includes a volume/mix contribution of 3.5%, while pricing is expected to stabilize at 0.6%. In the Essential Dairy and Plant-based (EDP) products division, a 3.7% LFL growth is anticipated, driven by strong performance in North America, particularly from coffee creations and protein products. The European market is also expected to show improved volume performance after challenging retailer negotiations in the first half, with price growth slowing but remaining slightly positive.
For the Specialised Nutrition division, UBS projects a 5.0% LFL growth, bolstered by robust development in China. The recent launch of Nuturis in Hong Kong in September is noted, although it is expected to have only a minimal impact on the third-quarter figures for the division.
The Waters (NYSE:) division is estimated to see a 4.0% LFL growth, which represents a slight sequential slowdown from the 4.4% growth reported in the second quarter. The deceleration is attributed to less favorable weather conditions in Western Europe and Mexico. UBS's analysis and expectations provide a detailed breakdown of the anticipated performance across Danone's various divisions ahead of the official report later in the month.
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Analysis:
UBS's reaffirmation of a Buy rating on Danone SA stock with a positive outlook for the third quarter trading update indicates confidence in the company's performance. The projected 4.1% Like for Like sales growth, along with detailed breakdowns of performance across different divisions, provides valuable insights for investors.
Investors should take note of the anticipated growth in the Essential Dairy and Plant-based products division, as well as the Specialised Nutrition division's strong performance in China. The slight slowdown in the Waters division's growth due to weather conditions highlights potential challenges for the company.
Overall, UBS's analysis suggests that Danone SA is well-positioned for continued growth and success in the coming months, making it a potentially attractive investment opportunity for those looking to capitalize on the company's performance.