Oct 15 - ING raised its rating on British confectionery giant Cadbury Plc to "hold" from "sell" after its share price fell 20 percent over the past three months.
The brokerage said it remained cautious on the stock going into 2009 mainly on worries that margin progress may be affected by commodity price increases.
ING cut its price target on the stock to 560 pence from 580 pence on a more cautious margin outlook for 2009.
Shares of Cadbury closed at 508 pence on the London Stock Exchange on Tuesday.
"We believe competition is set to intensify in the quarters ahead, and it remains to be seen whether the competition will follow the aggressive pricing action planned by Cadbury," the brokerage said in a note.
"We believe the 'easy' market share gains are over, limiting potential sales growth," ING said.
Separately, JP Morgan Securities also cut its price target for the company, to 610 pence from 710 pence, and maintained a "neutral" rating.
"Given our less bullish profit margin expansion assumptions, we believe Cadbury is fairly valued relative to its direct peers," it said in a note.
In a trading update, Cadbury on Tuesday reiterated that 2008 sales growth would be around the top of its medium-term range of 4-6 percent, while its operating margin would meet a consensus forecast of 11 percent, up from 9.8 percent last year. It aims for a mid-teens operating margin by 2011.
"The trading update provided greater colour about the company's potential to reach its 2011 targets," JP Morgan said.
The brokerage also raised its sales growth estimates on the company for 2008 but cut its margin assumptions for 2009-10.
Cadbury, which is facing a slowdown in world markets, higher cocoa prices and the threat from new industry leader Mars-Wrigley, said it expected commodity and input costs to rise between 6 percent and 8 percent in 2009, after an estimated rise of 5-6 percent for 2008.