Unilever Upgraded to Buy at Julius Baer

Above: Unilerver CEO Hein Schumacher. Image: Unilever.

Julius Baer has upgraded Unilever to a "Buy" rating, citing an overreaction to the consumer goods giant's recent earnings report.

The Swiss private bank lowered its price target slightly to EUR 59 from EUR 60 but sees the stock as attractively valued following a sharp post-results decline.

Unilever shares had outperformed the sector by 22% over the past six months but dropped significantly after its latest earnings report, despite the company announcing a share buyback program. Julius Baer analyst Peter Casanova believes the sell-off was excessive, noting that the stock now trades at more than a 30% discount to global peers and sits at the lower end of its five-year trading range.

"We see the correction as too harsh and have upgraded the shares to Buy," Casanova said.

Above: Unilever at daily intervals.

Following the earnings release, Unilever’s share price initially fell by as much as 7%, reflecting investor concerns over softer-than-expected volume growth and management’s cautious outlook for 2025.

However, the stock has since stabilised, recovering part of its losses as analysts reassessed the company’s valuation and long-term prospects. "Despite announcing a share buyback, investors used the results as an opportunity to take profits," Casanova added.

The company’s full-year 2024 results came largely in line with expectations. Organic sales growth reached 4.2%, marginally below the consensus estimate of 4.3%. Volume growth stood at 2.9%, just shy of the 3.0% consensus, while price increases matched expectations at 1.3%.

Unilever maintained its 3%-5% growth target but indicated that it does not expect to hit the lower bound of that range until the second half of 2025. Management also reiterated its expectation of a modest margin improvement.

Since reporting, the consensus growth forecast for the company has softened slightly from 4.2% to 4.09%. "The company remains fundamentally strong, and we see value in the shares at current levels," Casanova said.

In its 2024 earnings report, Unilever reported an underlying operating profit margin of 16.7%, up 50 basis points from the previous year, driven by cost efficiencies and pricing actions. The company’s underlying earnings per share (EPS) grew by 5.5%, reflecting improved operational performance.

Unilever’s Nutrition and Ice Cream divisions showed the strongest growth, with Home Care lagging behind. CEO Hein Schumacher emphasised ongoing cost-cutting efforts and investments in core brands to drive future growth.