Unilever PLC (LSE:ULVR) remains a buy with Jefferies, believing the “magic” should start in the second half ahead of the consumer goods company’s first-quarter update on 27 April.
The broker remains positive on the FTSE 100 listed group, adding gross margins and volumes are set to inflect upwards, with new chief executive Hein Schumacher set to take over in July.
Jefferies said that recent moves at Indian branch Hindustan Unilever would “appear to corroborate our inflation inflexion thesis", adding that “net margin inflation at Hindustan Unilever peaked at 22% in the third quarter of 2022, falling to 18% in the fourth quarter".
As a result, Hindustan Unilever lowered prices on certain products via either reductions or pack size increases.
Unilever remains Jefferies' key pick in European foods and home and personal care, although the shares have yet to reward the broker’s faith, up by only 2% in the year so far.
Looking ahead, Schumacher starts as boss on July 1, meaning the first-quarter update will be the last under Alan Jope.
Despite his five years in charge being impaired by Covid, the GSK misstep and the odd profit warning, Jefferies believes he is “bequeathing an apparently well-functioning new organisation, heavily re-based margin and, in our view, a buoyant outlook".