Unilever shares rise as TD Cowen lifts price target on earnings beat By Investing.com

On Friday, TD Cowen expressed confidence in Unilever plc (LON::LN) (NYSE: UL), maintaining a Buy rating and increasing the price target for the consumer goods company’s shares to GBP5,700 from GBP5,200.

The firm’s analyst highlighted Unilever’s robust first-half earnings per share (EPS), which outperformed consensus estimates, and an upgraded EBIT margin guidance as key factors underpinning the positive outlook.

Unilever reported a significant first-half EPS beat, with figures reaching €1.62 compared to the consensus estimate of €1.44. This strong performance was complemented by an upward revision of the company’s EBIT margin forecast.

Despite second-quarter organic sales growth of 3.9% falling slightly short of TD Cowen’s 4.4% projection, the substantial increase in first-half EBIT margin to 19.6%, up 250 basis points, was seen as a validation of Unilever’s operational improvements and cost reduction efforts.

The analyst from TD Cowen anticipates that Unilever will experience a continued acceleration in volume growth during the second half of the year. This momentum is expected to contribute to narrowing the valuation gap between Unilever and its home and personal care (HPC) industry peers.

The adjustment in the price target reflects the firm’s reinforced confidence in Unilever’s strategic direction and its ability to deliver shareholder value.

Investors have been closely monitoring Unilever’s performance, particularly in light of the challenges posed by competitive market conditions and cost pressures. The company’s focus on operational efficiency and margin improvement offers a positive signal for its financial health and strategic positioning within the HPC sector.

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 broader cost-saving initiative. This move is expected to eliminate 3,200 roles, contributing to a global layoff strategy that anticipates up to 7,500 job cuts. The decision aligns with CEO Hein Schumacher’s strategy to regain investor trust by simplifying the business structure.

Deutsche Bank has reaffirmed its ‘Buy’ rating on Unilever, maintaining confidence in the company’s growth strategy despite the departure of the CEO of Unilever’s Prestige Beauty business. The firm predicts that Unilever will achieve over 2% volume mix growth at the group level for the current year.

Meanwhile, JPMorgan has upgraded Unilever’s stock from ‘Underweight’ to ‘Overweight’, citing the company’s ongoing transformation and potential for future growth. The firm anticipates best-in-class volume growth of 2.9%.

Argus has also raised its stock price target for Unilever to $60, anticipating benefits from new products, an increased presence in emerging markets, and continuous productivity enhancements.

Similarly, Jefferies has raised its price target for Unilever to £37.00 following the company’s first-quarter results for 2024, which showed a notable increase in volume and mix growth.

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