BROKERWATCH Unilever & Danone upped to 'hold' in Consumer Goods review at RBS

LONDON, Jul 18, 2008 (Thomson Financial via COMTEX) -- DA | Quote | Chart | News | PowerRating -- RBS has reviewed the European Consumer Goods sector on Friday morning, upgrading Unilever and Groupe Danone to 'hold' from 'sell' and British American Tobacco Plc. to 'buy' from 'hold' but downgrading L'Oreal to 'sell' from 'hold'.

RBS said in a note to clients on Friday that it thinks Tobacco stocks look more attractive than Food and Household & Personal Care, given their modest valuations and lower earnings risk.

Imperial Tobacco Group Plc. remains a 'buy' at RBS and it upgrades both Danone and Unilever after their significant underperformance year-to-date.

The broker said Nestle is its preferred Food stock, though it is nervous that consensus expectations may not have taken on board the likely adverse impact of currency on reported margins.

The broker continues to have Reckitt Benckiser Group Plc. as its preferred Household & Personal Care play, as it believes the weakness ahead of second quarter numbers looks overdone given its expectation that the group remains firmly on track to meet full-year guidance.

Though the broker sees modest downside risks to forecasts in the Consumer Goods sector, given the deteriorating macro back drop, it feels valuations now seem to reflect this.

While the forthcoming results season may not be a catalyst, RBS believes the recent sell-off has created opportunities for selective buying. joe.brock@thomsonreuters.com jb1/jfr

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