British consumer goods producer Unilever (UL) has announced that it will be pursuing a spin-off over previous private equity plans. The company had initially discussed the idea of selling off its ice cream business to a private equity firm. However, according to a new report from The Financial Times, Unilever has decided against this idea, as its CEO is more interested in structuring a turnaround plan that involves spinning off the unit rather than selling it.
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What’s Happening with Unilever Stock Today?
While there’s nothing inherently negative about this news, Unilever stock is not reacting well. As of this writing, it is down 1% for the day after a morning of highly volatile trading. The past week has been difficult as well, although UL stock remains in the green. That said, the company recently saw shares plunge, dragging it into the red for the quarter.
This type of performance could certainly call Unilever’s growth prospects into question. But as noted, the company is working on a plan to turn things around, which includes spinning off its ice cream division to operate as an independent entity. Its holdings in the ice cream production space include well-known companies such as Ben and Jerry’s, Wall’s, and Magnum.
The Financial Times cites “the division’s large size and complicated supply chain” as factors that compelled potential private equity bidders to scale back their interest in a purchase. But if the spin-off is successful, it could benefit UL stock, as investors would no longer have to be concerned with these factors, especially if supply chain problems persist into 2025.
Wall Street Is Sidelined on UL Stock
Not many Wall Street banks follow Unilever, but those who do regard it favorably. Analysts have a Moderate Buy consensus rating on UL stock based on two Buys assigned in the past three months, as indicated by the graphic below. After a 23% rally in its share price over the past year, the average UL price target of $69.50 per share implies 21% upside potential.
