What Morgan Stanley Is Watching At These Food Companies Pre-Earnings

In a research report rolled out Monday, Morgan Stanley analysts Erik Sjogren and Matthew Grainger provide a preview of the food industry's first quarter earnings.The firm does not expect substantial trend changes across the segment. They project first quarter organic growth of 4.1 percent for Nestle SA (VTX: NESN), below its full-year forecast "with focus on progress in China and the US Frozen Food after recent soft performance." Nestle results are to be released on Friday before the market opens.The analysts will be looking at guidance, "comments on the market environment," both in the US and emerging markets, the company's "internal focus on ROIC and portfolio management," and the Nestle Health Science segment.Danone SA (ADR) (OTC: DANOY) "should see LFL growth of 4.4% in 1Q on our estimates, driven by ELN [Early Life Nutrition], Waters and Medical offsetting modest momentum in Fresh Dairy." The company is to announce its financial results on Wednesday morning.The analysts advise to look out for fiscal 2015 guidance, "colour on the progress of recovery in China Early Life Nutrition, (…) demand trends in EU Dairy and competitive intensity in US Dairy," the outlook for Russia, and remarks on input cost tends.For Unilever plc (ADR) (NYSE: UL), the analysts model dimmer organic growth at 2.2 percent, "reflecting tough end markets particularly in key EMs." The earnings call is scheduled for Thursday before the market open.The firm recommends paying attention to guidance, trends in the company's main EM/HPC markets, "color on the use of cash/capital management," and the efforts being undertaken to turn around underperforming parts of Unilever's food portfolio.Danone and Nestle remain among Morgan Stanley's top picks. The firm rates them both at Overweight, while giving Unilever an Equal-weight grade.