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On Tuesday, UBS downgraded Universal Robina (URC:PM) (OTC: UVRBF) stock from Buy to Neutral, significantly reducing the price target from PHP135.00 to PHP90.00. The revision reflects concerns over the company's sustained market share losses, which the analyst attributes to ongoing consumer preference for value and weakened brand loyalty.
Universal Robina, as a mid-market player, faces the need to implement pricing interventions that could pressure margins in the near term and carry execution risks. The company's sugar business, which is also a part of its diversified portfolio, is expected to take longer to recover than previously anticipated.
UBS forecasts a modest 2% revenue growth for Universal Robina and anticipates flat operating profit margins in 2025. This projection positions UBS's expectations 18% below the Visible Alpha consensus on the company's 2025 earnings per share (EPS).
The downgrade to Neutral is based on the analysis that Universal Robina must navigate a challenging market environment, where consumer behavior has shifted towards more value-oriented products, impacting the company's ability to maintain its market share and brand strength.
The lowered price target and revised rating suggest a more cautious outlook on the company's financial performance, as UBS anticipates these market dynamics will continue to influence Universal Robina's operations and profitability in the coming years.
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