Shares in Unilever PLC (LON:ULVR) drifted lower on Tuesday after HSBC downgraded its rating for the Anglo-Dutch consumer products giant to ‘hold’ from ‘buy’ in an outlook for European Staples in 2020.
In afternoon trade, shares in the Marmite maker in London were down 0.8% at 4,235.50p.
The global bank’s analysts noted that 2019 will go down “as a year of divergence for the European Food & HPC (household & personal care) companies but also a generally disappointing one with the majority of companies missing guidance in some capacity.”
And, they added: “We think that conditions in 2020 are likely to remain tricky for the sector. Good margin outcomes are now priced in for many companies and further share price strength is contingent on improved organic sales growth, which will be hard to achieve amid low inflation and sluggish end markets.”
Aside from Unilever, the HSBC analysts also downgraded German firm Henkel to 'hold', but said they remain buyers of fellow Frankfurt-listed stock Beiersdorf and Unilever’s FTSE 100-listed peer Reckitt Benckiser PLC (LON:RB.).
The analysts said they expect Reckitt will announce a margin reset with its full-year results in February.