😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Deutsche Bank keeps 'Buy' on Unilever stock, confidence in growth strategy

EditorEmilio Ghigini
Published 2024-06-17, 10:04 a/m

On Monday, Deutsche Bank (ETR:DBKGn) reiterated its Buy rating on Unilever (LON:ULVR:LN) (NYSE:UL) stock, maintaining a price target of GBP46.00. The firm's stance comes in light of the recent announcement that the CEO of Unilever's Prestige Beauty business will be departing to start her own investment fund.

This segment, which represents approximately 2% of Unilever's total sales, has shown consistent double-digit growth and harbors the company's ambition to double its size.

Prestige Beauty, which includes 11 brands such as Dermalogica and Paula’s Choice, has experienced a slowdown in growth, mirroring the deceleration in the broader US beauty market.

Despite this, Deutsche Bank anticipates that Unilever will achieve over 2% volume mix growth at the group level for the current year. Historically, the Prestige division has contributed around 30 basis points to Unilever's volume/mix growth.

Unilever's Prestige Beauty business is a key growth driver for the company, and its consistent performance has been a factor in Deutsche Bank's positive outlook on the stock. The business's double-digit expansion trajectory has been significant, even though it currently accounts for a small fraction of the overall sales.

The departure of the Prestige Beauty CEO marks a change in leadership for this high-growth area of Unilever. The company's aspirations to expand this segment remain intact, as it works towards doubling the size of the business. This ambition reflects Unilever's strategic focus on growing its presence in the premium beauty category.

With a price target of GBP46.00, Deutsche Bank's recommendation underscores its confidence in Unilever's ability to deliver growth and navigate through the challenges in the beauty market. The bank's forecast of more than 2% volume mix growth at the group level suggests a positive outlook for the company's performance in the coming year.

In other recent news, Unilever has been the subject of several strategic moves and financial adjustments. JPMorgan (NYSE:JPM) recently upgraded Unilever's stock from Underweight to Overweight and increased the price target to £51.00, citing the company's ongoing transformation and potential for future growth. This follows a reevaluation of Unilever's strategic initiatives, including cultural change, corporate governance improvements, and a focus on increasing market share.

On the other hand, Argus maintained a Buy rating on Unilever and raised the stock price target to $60, anticipating benefits from new products, increased presence in emerging markets, and continuous efforts to enhance productivity.

Jefferies also updated its outlook on Unilever, raising the price target to £37.00 while maintaining an Underperform rating. This adjustment follows Unilever's first-quarter results for 2024, which revealed a notable increase in volume and mix growth.

Unilever recently reported a 4.4% increase in first-quarter sales, surpassing analyst forecasts, with a 2.2% increase in sales volumes and a 2.2% price hike. In a strategic move, Unilever also announced its intention to spin off its renowned ice cream division into a separate entity to streamline operations and cut costs, leading to the reduction of approximately 7,500 jobs globally. These recent developments indicate Unilever's active efforts in reshaping its business strategy and financial outlook.

InvestingPro Insights

As Unilever (NYSE:UL) continues to navigate through the shifts in the beauty industry, real-time data from InvestingPro provides a broader perspective on the company's financial health and market position. With a robust market capitalization of $140.94 billion and a Price/Earnings (P/E) ratio of 20.15, reflecting investor confidence, Unilever showcases a solid standing in the market. Notably, the company has also been able to maintain dividend payments for an impressive 33 consecutive years, signaling a strong commitment to shareholder returns.

InvestingPro Tips highlight that Unilever is a prominent player in the Personal Care Products industry, which aligns with the strategic focus mentioned by Deutsche Bank on growing its presence in the premium beauty category. Additionally, the company's stock is trading near its 52-week high, indicating a strong return over the past three months. This performance is underscored by a 15.83% price total return over the last three months, complementing the positive outlook from analysts. Moreover, Unilever operates with a moderate level of debt, which provides flexibility and resilience in its operations.

For readers interested in a deeper analysis, there are more InvestingPro Tips available at https://www.investing.com/pro/UL. And for those considering an InvestingPro subscription, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering even more valuable insights to inform your investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.