SNS: Acomo, Q1 in line, valuation fair, Hold

The facts: First quarter trading update and downgrade to Hold

Our analysis: Based on our updated estimates, we expect Acomo to report broadly flat earnings in 2012, up from our earlier estimates. We forecast lower y-o-y EBITDA as a consequence of pressure on profitability in the sunflower seeds business. We believe the current valuation of Acomo shares is fair. Shares are trading in line with multiples of the past 2 years and some 20-25% ahead of the average P/E multiple in the past 5 years. We believe the latter is justified after the major change from the Deli acquisition. However, it is difficult to see much upsight from current levels, both for earnings as for valuation multiples.

Conclusion & action: Acomo released an reasuring trading update, in line with the company's previous comments. While we have increased our earning estimates, we believe the shares are fairly valued at current levels. We downgrade our rating from Accumulate to Hold with a new target price of EUR 12.50