Jefferies, in the wake of “a material correction” in the share price, sets a new price target of 5,000p which suggests some 12% upside to the current market price.
“Sentiment is bleak and consensus has chosen to interpret FY20 growth guidance conservatively,” Jefferies analyst Martin Deboo said in a note.
He added: “A surprise FY20 warning, just prior to Christmas, has taken 8% off the shares.”
“Sentiment is weak: The recent seminar underwhelmed. CEO Alan Jope is yet to win the confidence of the market. Former Chair Marijn Dekkers has upped sticks to run a biotech fund.”
Jefferies noted that there’s “signs of green shoots in key markets” and that the lower market valuation may be a “spur to action” or “an invitation for activism”.
Rounding off his view, Deboo said: “Foreseeable catalysts, most obviously in the form of growth surprises, a return to buybacks and/or portfolio moves, feel unlikely prior to H2.
“Activism is impossible to predict, but of material probability in our view. In the meantime, we think the downside risks - to numbers and relative valuation - are limited.”