A tough US market has caused investment bank Morgan Stanley to downgrade its recommendation on the UK's Cadbury Schweppes Plc to "neutral" from "outperform".

However the banks fair value remains at 510 pence per share.

"There are more challenges ahead for 2002. This is particularly true for U.S. beverages, where competition will stay tough and Cadbury will have to step up innovation and marketing," Morgan Stanlay said in a note.