Berenberg lifts Unilever targets on 'best-in-class growth'

(Sharecast News) - Berenberg has lifted its target price for Unilever following the consumer-goods giant's 2024 results last week, predicting that "best-in-class growth" from the company will persist in 2025. Annual figures from the company on 13 February saw underlying sales growth of 4% meet analysts' expectations, with slightly better-than-expected pricing contribution of 1.3% (consensus: 1.1%) offsetting a slight miss with volume/mix growth of 2.7% (consensus: 2.9%).

Underlying operating margins came in at 18.4%, up 170 basis points on the previous year and slightly above the consensus forecast of 18.3%, helping underlying earnings per share rise 14.7% to €2.98, beating the €2.92 forecast.

Following the results, Berenberg raised its target price for the stock from 5,490p to 5,640p and reiterated a 'buy' rating.

"In our view, the investment case for Unilever remains strong. A quick review of 2024 highlights Unilever's best-in-class volume growth (2.9%), organic sales growth (4.2%), gross margin improvement (280bp), operating margin improvement (170bp), increase in brand marketing investments (up by 120bp to 15.5% of sales) and 15% EPS growth," the broker said.

"While this performance is unlikely to be replicated in 2025, we remain constructive on Unilever, which we expect will continue to deliver above-average growth (in volume, organic sales and EPS) versus industry peers such as Nestlé and P&G."

Berenberg has pencilled in 3.9% organic sales growth in 2025 along with 6% EPS growth, but highlighted that any signs of a turnaround in Unilever's struggling businesses in India, Latin America and Indonesia provide upside risk to these forecasts.

The shares were down 0.7% at 4,367p by 1302 GMT.