Investing.com -- Citi Research downgraded Danone (EPA: DANO ) to “neutral," saying the stock’s recent outperformance has already priced in its defensive strengths and track record in recessionary periods.

Danone shares have outpaced both peers and the broader market by around 11% since tariff concerns emerged, reflecting its low exposure to trade and destocking risks, along with easing concerns around capital allocation.

The French food company has also delivered consistent relative earnings upgrades during past downturns.

However, Citi said further re-rating may now depend on more specific drivers—chiefly, confirmation that Danone’s U.S. dairy business has become a longer-duration growth category. That signal now appears delayed due to macroeconomic pressures and growing competition.

Year to date, the stock has gained 17% relative to the sector. With limited upside risk to estimates and valuation stretched, Citi believes the rally may have run its course for now.

Citi Research could revisit its stance if data from the company’s Essential Dairy and Plant-based (EDP) division proves more resilient than feared, or if the stock’s valuation again trades at an unjustified discount to peers.