TD Cowen holds Unilever stock Buy rating and $70 target

On Thursday, TD Cowen reaffirmed its Buy rating and $70.00 price target for Unilever plc (NYSE:UL) shares. According to InvestingPro data, Unilever, a prominent player in the Personal Care Products industry, currently trades at $59.14 and appears slightly undervalued based on comprehensive Fair Value analysis. The stock has demonstrated low volatility, with a beta of 0.26, making it an potentially attractive option for stability-focused investors. The firm’s analyst highlighted that Unilever’s fourth-quarter organic sales growth of 4.0% matched consensus estimates of 4.1%, with volume growth slowing to 2.7%. Despite a slight earnings per share (EPS) beat and a second-half operating margin that exceeded expectations by 20 basis points, Unilever’s stock faced a downturn following the company’s forecast, suggesting growth between 3-5% for 2025 would be more pronounced in the latter half, including a sequentially lower first-quarter growth and a decline in first-half margins. InvestingPro analysis shows the company maintains strong fundamentals with a 42.9% gross profit margin and has consistently paid dividends for 33 consecutive years.

The analyst from TD Cowen perceived the negative stock reaction to the guidance as an overreaction. He pointed out that the expected decline in first-half margins and slower first-quarter growth in 2025 should be mitigated by pricing adjustments anticipated in the second half of the year, along with positive EPS revisions for 2025. The 2025 outlook anticipates organic sales growth of 3-5%, with the second half expected to see more growth than the first. Volume and mix growth in the first quarter of 2025 are projected to be lower than the fourth quarter of 2024, but improvements are expected throughout the year, particularly in Indonesia and China, as a result of strategic actions taken in 2024. Additionally, pricing is anticipated to play a more significant role in driving growth in the second half of the year due to the time lag between Unilever’s pricing strategy and the impact of higher commodity costs. For deeper insights into Unilever’s financial health (rated GOOD by InvestingPro), including detailed analysis of its pricing power and market position, subscribers can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

In other recent news, Unilever has seen a flurry of activity from analysts. Bernstein analysts at SocGen Group upgraded Unilever’s rating from Market Perform to Outperform, citing signs of a turnaround due to improved category growth and strong innovation efforts. They also increased the price target significantly. However, RBC Capital Markets downgraded Unilever’s stock from "Sector Perform" to "Underperform" due to concerns about the company’s growth targets and limited market leadership. TD Cowen, while reducing the price target, maintained a Buy rating for the stock, highlighting the company’s potential in its focused market strategy.

In addition to the analyst activity, Unilever outlined its strategic plan, the "Growth Action (WA:ACT) Plan 2030," during an Investor Event. The company aims to complete an €800 million productivity program and spin-off its Ice Cream division by 2025. The plan focuses on key markets, premiumization of products, and leveraging scale and simplicity in other markets. Unilever’s medium-term guidance aims for mid-single digit underlying sales growth, supported by a minimum of 2% underlying volume growth. These are recent developments in the company’s ongoing efforts to drive growth and enhance global consumer experiences.

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