On Friday, TD Cowen expressed his Unilever plc (LON::LN) (NYSE: UL), maintained a Buy rating and raised the price target on the consumer goods company’s stock to £5,700 from £5,200.
Analysts at the company highlighted Unilever’s strong first-half earnings per share (EPS) that beat consensus expectations and an increase in EBIT margin guidance as key factors underpinning the positive outlook.
Unilever reported that earnings per share increased significantly in the first half, reaching 1.62 euros, and the market consensus was 1.44 euros. The strong performance was supported by an upward revision to the company’s EBIT margin forecast.
Although organic sales grew by 3.9% in the second quarter, slightly lower than TD Cowen’s forecast of 4.4%, the EBIT margin increased significantly to 19.6% in the first half, an increase of 250 basis points, which is regarded as Unilever’s operational improvement and cost Verification of cuts.
Analysts at TD Cowen expect Unilever’s sales growth to continue accelerating in the second half. This momentum is expected to help narrow the valuation gap between Unilever and its home and personal care (HPC) industry peers.
The adjustment to the target price reflects the company’s increased confidence in Unilever’s strategic direction and its ability to create shareholder value.
Investors have been paying close attention to Unilever’s results, especially given the challenges posed by competitive market conditions and cost pressures. The company’s focus on operating efficiencies and margin improvements sends a positive signal for its financial health and strategic positioning in the HPC space.
In other recent news, Unilever announced plans to cut a third of its European office jobs by the end of 2025 as part of a wider cost-savings plan. The move is expected to eliminate 3,200 positions and help implement a global layoff strategy that is expected to eliminate up to 7,500 jobs. The decision is in line with Chief Executive Hein Schumacher’s strategy to regain the trust of investors by simplifying the business structure.
Despite the departure of the CEO of Unilever’s high-end beauty business, Deutsche Bank reiterated its “buy” rating on Unilever and maintained its confidence in the company’s growth strategy. The company expects Unilever to achieve sales growth of more than 2% at the group level this year.
Meanwhile, J.P. Morgan upgraded Unilever’s stock rating to “overweight” from “underweight,” citing the company’s ongoing transformation and potential for future growth. The company expects sales to achieve optimal growth of 2.9%.
Argus also raised its price target on Unilever to $60, anticipating benefits from new products, increased business in emerging markets and continued improvements in productivity.
Likewise, Jefferies raised its price target to £37.00 after Unilever reported first-quarter 2024 results, which showed significant volume and product mix growth.
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