Shares in the UK's Dairy Crest dropped in morning trade today (19 October) following news that brokerage firm Goldman Sachs had downgraded the dairy producer to 'sell' from 'neutral'.

Goldman Sachs said that the downgrade was the consequence of the recent strength of Dairy Crest shares. "Our downgrade is prompted by the recent strength in the share price - up 25% in the past three months - and is based on relative valuation," the brokerage wrote.

At 1.10pm (GMT) shares in the dairy company had fallen 13.50 pence, or 2.18%, to 606.50 pence.

However, in the note issued to clients this morning, Goldman Sachs analysts upgraded Dairy Crests estimated EPS, reflecting the sale of the group's private label cheese business.

Earnings per share are expected to increase by 2% this year to 44.68 pence, in 2007 it has predicted that EPS will rise by 3% to 50.68 pence, and in 2009 it is believed that EPS will increase by another 3% to 54.01 pence.

On this basis, Goldman Sachs upped Dairy Crest's price target to 550 pence, from 520 pence.