BN: Protein Dairy And China Nutrition Momentum Will Support Steady Returns Ahead

Analysts have modestly increased their price target for Danone, citing a series of recent target hikes to the mid EUR 70s to low EUR 80s range, along with growing confidence that improving trends in protein dairy and China Specialized Nutrition can support a more sustainable growth trajectory.

Analyst Commentary

Recent research updates reflect a generally constructive stance on Danone, with multiple price target increases signaling greater confidence in the company’s medium term growth prospects and execution.

Bullish Takeaways

• Bullish analysts highlight the upgrade to a Buy rating alongside a significant price target increase into the mid EUR 80s, indicating improved confidence in Danone’s valuation upside as earnings visibility strengthens.
• Stronger than expected momentum in protein dairy and China Specialized Nutrition is viewed as a structural growth driver, supporting a more durable top line acceleration and margin improvement over time.
• Incremental price target raises into the mid EUR 70s to low EUR 80s range are seen as a reflection of better execution, with expectations for a more sustainable growth run rate than previously assumed.
• Improving trends in key strategic categories are interpreted as evidence that prior portfolio and efficiency initiatives are beginning to translate into higher quality, more consistent earnings growth.

Bearish Takeaways

• Bearish analysts, while lifting price targets, are retaining more neutral ratings, signaling lingering concerns that current valuations may already discount much of the anticipated operational improvement.
• Ongoing challenges in creamers are cited as a drag on overall performance, creating execution risk if category headwinds persist longer than expected and offset gains in higher growth segments.
• Despite better trends in China Specialized Nutrition, some caution remains around exposure to China, where demand volatility and regulatory shifts could pressure the pace and consistency of growth.
• There is residual skepticism about the durability of the new growth run rate, with some investors wary that a weaker global consumer backdrop could limit Danone’s ability to fully realize its upgraded earnings potential.

What's in the News

• Tata Consumer Products is in advanced talks to acquire Danone's India nutraceuticals and specialised nutrition portfolio, giving Tata a stronger foothold in wellness and value added nutrition while Danone potentially streamlines its regional portfolio (Key Developments)
• Danone confirmed 2025 guidance, targeting like for like sales growth of 3% to 5% and recurring operating income growth faster than sales, indicating management confidence in margin and earnings improvement (Key Developments)
• Danone and ARGAN began construction of a new Aut0nom logistics site in Sorigny, which will double Danone's logistics capacity in France's Greater West and incorporate on site green energy for more sustainable cold chain operations (Key Developments)

Valuation Changes

• Fair Value: Unchanged at approximately €79.0 per share, indicating no revision to the central valuation estimate.
• Discount Rate: Essentially stable at about 6.18%, implying no meaningful change in the risk profile applied to future cash flows.
• Revenue Growth: Steady at around 3.0% annually, reflecting unchanged expectations for Danone’s top line expansion.
• Net Profit Margin: Effectively unchanged at roughly 9.3%, suggesting stable assumptions for long term profitability.
• Future P/E: Flat at about 21.8x, indicating no adjustment to the valuation multiple applied to forward earnings.