In a report released today, David Hayes from Jefferies maintained a Sell rating on DANONE SA (0KFX – Research Report), with a price target of €56.00.
David Hayes has given his Sell rating due to a combination of factors impacting DANONE SA’s market position and profitability. One significant concern is the competitive pressure in the Chinese market, particularly from Feihe, which has announced a substantial maternity subsidy program. This initiative by Feihe is expected to intensify competition and could lead to a reset in profit margins for companies operating in the Chinese infant milk formula sector, including Danone.
Furthermore, the subsidy program represents a significant investment by Feihe, equivalent to about 6% of its turnover, which could potentially shift market dynamics. With Feihe holding a leading market share in China, Danone’s Aptamil brand, which is currently second, may face increased challenges in maintaining its market position and profitability. These factors contribute to the cautious outlook and justify the Sell rating for Danone’s stock.
According to TipRanks, Hayes is a 3-star analyst with an average return of 3.2% and a 60.69% success rate.