DAVY VIEW

Danone’s Q3 out-turn will revive concerns that the habits of ‘Old Danone’ persist. We fundamentally believe, however, that this is not the case, as evidenced by gross margin expansion, a sequential acceleration in growth and a strong innovation pipeline. While the Q3 result will pressurise Danone’s FY20 ambitions, we still believe the group is on a fundamentally better pathway. Danone’s credentials in plant-based continue to impress with international expansion plans now well underway. We reiterate our ‘Outperform’ rating – our view is to take advantage of the share price weakness.