Barclays upgrades Unilever, downgrades Henkel
Barclays upgraded Unilever to ‘overweight’ from ‘equalweight’ and raised its price target to 3050p from 2850p, as it downgraded German rival Henkel to ‘equalweight’ from ‘overweight’ and raised the price target to €104 from €98.
Food Producers & Processors
8,020.88
16:59 26/04/24
FTSE 100
8,139.83
17:09 26/04/24
FTSE 350
4,470.09
16:59 26/04/24
FTSE All-Share
4,423.59
17:14 26/04/24
HENKEL VZ
n/a
n/a
Unilever
4,133.00p
16:40 26/04/24
“The impact of pricing dynamics on local margins in the industry and share price performance year-to-date prompt us to switch from Henkel to Unilever, as Unilever now offers cheaper options on profit growth than Henkel, where the bar is already high in terms of future capital allocation,” said Barclays.
Barclays said it expects Unilever to exceed a core earnings before interest and tax margin of 16% by 2020, driven by refreshments and home care, as well as a gradually improving product mix.
The bank said it now feels that Unilever's valuation and stock performance relative to peers has come back to a healthier level, and that the potential inflection in the home and personal care pricing environment offers some margin or market share upside, with more visibility than earlier this year.
“Our upside case includes a recovery in emerging markets, accompanied by greater operational gearing than we anticipate dropping through to operating profit ,” said Barclays.
At 09:55 BST, Unilever shares were up 1.7% at 2,881p while Henkel was up 0.1% at €108.15.