In a report released today, David Hayes from Jefferies maintained a Sell rating on Unilever, with a price target of p3,900.00.
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David Hayes has given his Sell rating due to a combination of factors related to Unilever’s strategic focus and market dynamics. The company’s emphasis on expanding its Beauty and Personal Care segment to account for two-thirds of its sales in the medium term suggests a significant shift in strategy. This shift requires substantial growth in this segment, estimated at around 9% annually, compared to the modest 1% growth anticipated in Homecare and Food.
Additionally, Unilever’s geographic focus on the highly competitive markets of the US and India presents challenges. While the separation of the Ice Cream division is expected to result in a higher-margin business, it also implies potential costs associated with price reductions and increased competitiveness. These strategic moves, while potentially beneficial in the long term, introduce uncertainties and risks that may impact the company’s performance in the near term, leading to the Sell recommendation.
Hayes covers the Consumer Defensive sector, focusing on stocks such as Nestlé SA, DANONE SA, and Reckitt. According to TipRanks, Hayes has an average return of 1.8% and a 50.57% success rate on recommended stocks.