Unilever PLC (LSE:ULVR) is showing early signs of improvement ahead of a turnaround plan aimed at boosting marketing investment in its top brands, according to Deutsche Bank.
After a first-quarter earnings beat on Thursday, analysts from the bank took an optimistic view on the consumer goods giant.
“Culturally, the changes in the organisation from the board to the c-suite need to fully extend to operational management,” analysts said in a note.
“However, early signs are that the organisation is responding to changes made.”
Unilever recorded first-quarter turnover of €15 billion (£12.9 billion), up 1.4% on a year ago and above analysts' expectations.
Sales also outdid expectations, rising 4.4%, as volume growth came in at 2.2%.
Full-year guidance was left unchanged, though Deutsche noted it expected Unilever to “confirm the previous view that volume growth will improve over the course of the year”.
“Whilst pricing may slow, we expect this to be positive at the group level over the course of the year,” analysts said, with Unilever laying out plans in October to boost marketing investment in its 30 biggest brands, such as Dove and Rexona - or Sure in the UK.
“There is clearly also room for further organic gross margin expansion alongside the announced productivity program that can facilitate further investment,” Deutsche said.
A ‘buy’ rating was reiterated on the back of the results, alongside a 4,600p share price target. This would mark a 12.7% improvement on Thursday’s close.