Shares of Danone fell over 5% after BofA Securities flagged concerns about a declining birth rate in China. The brokerage reiterated an "underperform" rating, citing the potential impact on the infant milk formula market, a significant profit driver for the French food group. BofA cut its price target, reflecting worries about future earnings.

BofA's analysis revealed a sharp drop in Chinese births, down 17% in fiscal year 2025. This follows a temporary rebound. The firm estimates that China accounts for a substantial portion of Danone's sales and adjusted earnings before interest and taxes. Early Life Nutrition in China is a key segment with high margins.

Demographic pressures are mounting, with a smaller cohort of women in their prime childbearing years. Without a shift in fertility trends, the addressable baby population for infant milk formula could shrink. BofA forecasts a 5% annual decline in the infant milk formula market within China.

While Danone has gained market share in China, analysts expect growth to slow. BofA remains cautious on Danone's performance in the region, predicting adjusted earnings will be below consensus. Investors should watch how Danone navigates the changing market dynamics, particularly in key geographies.