Unilever Shares Cut by UBS, ING

Shares of Unilever fall after downgrades from ING and UBS.
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NEW YORK (TheStreet) -- Unilever's (UL) - Get Report shares were downgraded by both UBS and ING on Friday after the company warned of a tougher second half of the year due to steeper commodities prices and a slow economic recovery in its key European and North American markets.

UBS's Alan Erskine downgraded shares of Unilever to neutral from buy.

Unilever, maker of Dove soap, Vaseline, Lipton's Tea, and SlimFast, made the cautious remarks amid its second-quarter financial results, released on Thursday.

In a note to clients, Erskine wrote that the rocky recovery in the U.S. and Europe will likely mean that the consumer-goods sector as a whole "will be out of favour" among investors, "with the burden now on the corporates to prove the environment is not deteriorating."

He suggested, though, that Uniliver shares are undervalued. The company's stock, he said, hasn't recieved credit for the company's recent "organizational and cultural changes" and its 50% exposure to emerging markets.

ING, meanwhile, downgraded Unilever to hold from buy.

Shares of Unilever were declining 3% to $27.07 in late-morning trading. Volume was heavy at 1.4 million shares, matching the daily average turnover in the name.

Also worrisome for Unilever investors, according to Erskine, was the company's decision to spend less on advertising and promotion compared with the second half of last year. (Though such spending is expected to be up for the year as a whole.) That's in contrast to Unilever's competitors, such as

Procter & Gamble

(PG) - Get Report

, which have recently increased investments in advertising and promotion.

-- Reported by Andrea Tse in New York

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