Barclays Capital has upgraded the consumer goods giant Unilever PLC (LON:ULVR) to ‘overweight’ from 'equal-weight', citing the company’s shake-up plans as the catalyst. Unilever embarked on a strategic review, which could lead to the sale or demerger of various businesses (but will more likely focus on cost control measures) after rebuffing a £115bn bid from Kraft Heinz. “Unilever was arguably on the right course to improving profitability - but there's nothing like a little external pressure to expedite the process (whilst also forcing its hand into other means of value creation),” Barclays said in a note to clients. The bank said it expects the company to extend the reach of its zero-based budgeting initiatives and “edge up” margin guidance when it unveils its self-help measures. “Beyond a welcome sale (or demerger) of developed market spreads, we would not expect significant portfolio changes nor do believe there needs to be,” Barclays added. It said while the shares have advanced 18% since the Kraft Heinz bid approach, they don’t fully price in the impact of the business’s economy drive or impact on earnings per share of the stock re-purchase programme. Its price target is £43.60 - £3.54 ahead of the current share price. Of the 15 analysts logged as following Unilever, 10 are positive on the stock and there is only one with a ‘sell’ recommendation, according to the Brokerforecasts site.
Barclays Capital upgrades its stance on Unilever on hopes for firm's shake-up plans
Unilever embarked on a strategic review, which could lead to the sale or demerger of various businesses (but will more likely focus on cost control measures) after rebuffing a £115bn bid from Kraft Heinz.