Goldman Sachs sees scope for disappointment when consumer products giant Unilever PLC (LON:ULVR) concludes a strategic review in early April prompted by the surprise £115bn bid approach from Kraft Heinz (NASDAQ:KHC), which was rejected then withdrawn.
In a note to clients, reiterating a ‘sell’ rating on Unilever, Goldman’s analysts said: “We believe the value KHC saw in Unilever may be difficult to unlock: the company already has EBIT margins broadly in line with most peers”.
READ: Unilever announces business review …
They added: “We expect Unilever to become more focused on cost delivery in the face of rising inputs and growing structural challenges from lower entry barriers and weak market growth.”
The analysts concluded: “While we expect a deeper focus on cost to be the main message, a route to better organic growth through acquisition or marketing investment would create more value in the long term. “
The Anglo-Dutch firm will issue a first-quarter trading update on April 20, and Goldman expects it to show organic sales growth of 2.3% and reported sales of €13.15bn.
The broker’s 12-month price target has increased to 3,410p from 3,020p but that still implies around 15% downside.
Around mid morning, Unilever shares were trading at 4,062p, up 22p on last night’s close.