Yesterday's share price which came after news of a slower-than-expected organic growth from global consumer goods giant Unilever plc (LON:ULVR) was a bump in the road and the group is still in good shape, says German broker Berenberg.
Shares in the FTSE 100 constituent sank over 5% yesterday as its third quarter sales missed estimates by a third and it posted 2.6% organic growth, short of consensus of 3.9%.
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Berenberg analyst James Targett isn't surprised at the market reaction, bearing in mind the "strong" run the shares had enjoyed leading up to the report.
The global group which owns the ubiquitous Marmite, Dove, Sunsilk and Domestos brands, faces increasing competition from smaller, nimbler players, but said it was on track to reach its savings target of €6bn and underlying operating margin of 20% by 2020.
"Ultimately, Unilever is taking the biggest steps versus peers to increase the agility of its business model, reduce costs, embrace digital and e-commerce, and future-proof its portfolio," said Targett.
He repeated a 'buy' stance, but trimmed the price target to £50, from £50.75 previously. Shares are currently around the £42 level.
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The broker has also cut its 2017 EPS (earnings per share) estimate by 3.5% and 2018 by 5%, mostly reflecting foreign exchange headwinds, but also 60-30bp lower organic growth (3.1% and 3.9%).
"Volume growth did improve in three out of four divisions and the negative issues are relatively isolated to certain markets and categories," highlighted Targett.
"Management is adamant the softer top line is not due to cost savings, the delivery of which will protect EPS delivery, which we expect to grow by double digits through 2020."