Buy Rating for DANONE SA: Strong Growth with Reliance on China’s Specialized Nutrition Sector

Analyst David Hayes of Jefferies maintained a Buy rating on DANONE SA, retaining the price target of €84.00.

David Hayes has given his Buy rating due to a combination of factors that highlight both strengths and potential challenges for DANONE SA. The company has demonstrated a strong performance with a 4.8% like-for-like growth in the third quarter, surpassing consensus expectations. This consistent growth over five consecutive quarters indicates robust operational execution.
However, Hayes notes that this growth is heavily reliant on the success in China’s Specialized Nutrition sector, which poses a risk due to its dependency. Despite a shortfall in the US market, where volumes were below expectations, the overall performance remains solid. The reliance on the Chinese market is a concern, especially with potential future challenges like the anticipated decline in China’s infant formula demand by 2026. Nevertheless, the current momentum in China provides a strong foundation for the Buy rating.

In another report released on October 20, Kepler Capital also maintained a Buy rating on the stock with a €90.00 price target.