BROKERWATCH Danone upped to 'neutral' from 'sell' at UBS

LONDON, Jul 14, 2008 (Thomson Financial via COMTEX) -- DA | Quote | Chart | News | PowerRating -- UBS has upgraded Groupe Danone SA to 'neutral' from 'sell', according to dealers, on valuation grounds, while cutting the target price to 46 euros, from 50 euros.

In a note, UBS pointed to Danone's share price having underperformed the European food sector by 7 percent since mid-June.

It said this reflected a number of concerns, notably the health of the consumer in Western Europe and emerging markets, where consumers are getting to grips with fast accelerating food and energy price inflation; as well as worries about the ongoing hike in oil-related input costs.

Noting that the second-quarter results are on July 25, UBS said it recognises the specific headwinds Danone faces in Dairy, particularly in France and Spain, and Water, particularly in Europe, but judges much of this to be now discounted in the valuation following its substantial sell-off.

In addition, the broker said it anticipates a resilient performance from infant nutrition and management drawing attention to the attractions of clinical nutrition. brian.gorman@thomsonreuters.com btg/hjp

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