Unilever: Valuation Risk, Earnings Pressure, and Execution Uncertainty Drive Sell (Underperform) Rating into 2026

David Hayes, an analyst from Jefferies, maintained the Sell rating on Unilever. The associated price target was raised to p4,100.00.

David Hayes’s rating is based on persistent concerns about Unilever’s valuation and earnings trajectory as the company moves into 2026. He anticipates that the stock’s next-twelve-month price-to-earnings multiple could slip from around 17x to about 15x, reflecting his view that the current valuation is too rich given the operational challenges. In his assessment, profitability is likely to remain under pressure, with limited room for earnings expansion as pricing power moderates and operating margins face ongoing headwinds. The upcoming full-year results are expected to show only modest underlying volume and mix growth, suggesting that top-line momentum may not be strong enough to offset these pressures.
At the same time, Hayes highlights uncertainty around Unilever’s operating margin outlook for 2026, which could introduce further volatility to investor expectations in the first half of the year. He also flags the risk that the company’s performance in the United States, a key market, may slow and contribute less to overall growth than previously hoped. Combined with the disruption and execution risk associated with the planned ice cream business spin-off, these factors reinforce his cautious stance. Taken together, the pressured earnings profile, valuation downside, and potential weakening of sentiment lead Hayes to reaffirm a Sell (Underperform) recommendation on Unilever’s shares.