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A turbo call on Danone to amplify a title catch

The resignation of the financial director and the disappointing performance of the water division plunged the group into deep reconsideration. Discounted, the title, which did not benefit from the market rebound, can be played with a turbo call.

While investors are looking for lagging stocks, Danone has not taken advantage of the bargain hunt at this point. And for good reason, the world number two is in upheaval. After the disappointing financial performance of the first half and the third quarter linked to the water division penalized by the containment measures in the hotel and restaurant sector but also in specialized nutrition in China, the group began to overhaul its management with the departure of its financial director. A vast asset arbitrage program is also being carried out and aims to refocus the group on its most profitable brands. The objective is to bring Danone back on a path of organic growth of 3% to 5% per year, together with improving current operating profitability. The market is waiting to judge the relevance of this new strategy on the spot. This is why the stock still shows a 25% decline in its share price since the start of the year and has rebounded only 4% over the week.

a leverage of 3.1 times

With ratios of 16.7 and 15.7 times the estimated profit for this year and 2021, the title is cheap and should eventually catch up. The movement can be played by means of a turbo call issued by Société Générale with no expiry date and a safety threshold of 38.42 euros, below which the share must not fall. Otherwise, the certificate will lose almost all of its value. However, the significant gap between the current share price and the turbo safety threshold limits the risk profile of the certificate by allowing the time necessary to unwind the position in the event of an unfavorable trend in the security. Meanwhile, the call has an attractive leverage of 3.1 times. Thus, in the hypothesis of a rebound of the Danone share to 60 euros, the call will gain 29.2%. But be careful because, conversely, it will lose 38.2% of its value if the share ebbs back to 48 euros.

Our advice: buy a Danone turbo call issued by Société Générale (code: DE000CJ3X7G3); term: unlimited; security threshold: 38.42 euros; level of funding: 37.23 euros; parity: 1 share for 10 turbos; price: 1.78 euro; portion: 1.

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