Delhaize Group Falls After Deutsche Bank Downgrade

Deutsche Bank downgraded Delhaize Group DEG from Buy to Hold on Monday with a €59 price target for its stock on the Brussels exchange DELB.

Delhaize Group ADRs were under pressure Monday after the downgrade.

According to analyst Niamh McSherry, "Delhaize has been the best performer in our coverage ytd, with the share price rising 24 percent vs. +1 percent for the Stoxx 600. We think this performance has been justified given the solid sales momentum and robust profitability relative to peers. Given the limited upside to our unchanged €59 PT, we downgrade from Buy to Hold."

McSherry noted that Belgian weakness should be offset by U.S. performance and foreign exchange.

The report valued Delhaize, "on a SOTP basis, applying a 5.25x EV/EBITDA multiple. The US, Belgian and SEE businesses, resulting in a €59 price target (13.4x 15E PE)."

McSherry reported that "key downside risks include a slowdown in US comp store sales growth and margin pressure in Belgium. Key upside risks include an easing competitive environment, enabling margin increase."

The Delhaize Group ADR recently traded at $16.58, down 1.60 percent.