Liberum has repeated its 'sell' stance on Anglo-Dutch consumer goods giant Unilever PLC (LON:ULVR) saying it sees little scope for sales upgrades despite beating expectations in the third quarter.
The results yesterday were sidelined by the so-called Marmite-gate affair after one of its biggest customers Tesco (LON:TSCO) stopped stocking a host of its products, including the spread, in reaction to being asked to hike prices by 10% to mitigate the impact of the week pound.
The spat has now been resolved though details of the agreement were not made public, and both firms saw shares plunge over 3% yesterday.
In the three months to September 30, Unilever’s sales grew 3.2% to €13.4bn, giving a nine-month total €39.7bn (up 4.2%).
Underlying sales growth in emerging markets was 5.6% whilst in developed markets it was flat. Volumes were down 0.4%, while prices rose 3.6%.
Robert Waldschmidt, at Liberum, says sell the shares and targets 3,200p, compared to a current share price of 3,580p.
He notes the firm repeated its full year 2016 guidance for organic sales growth of around 4% and 30-40 basis points (bps) EBIT (earnings before interest and tax) margin uplift.
This is already factored in by consensus, leaving little scope for upgrades particularly with deteriorating end market demand and 5% foreign exchange (FX) headwinds, the analyst suggested.
Its high exposure to emerging markets augured well in the "good years" but now appears set to limit growth in tougher years, he said.
The firm needs to improve developed markets growth and achieve a better balance, he added.
Shares fell 0.49% to 3,579p in early deals. Tesco is up 2.54% to 200.05p.