Analysts at Deutsche Bank upgraded consumer goods company Unilever to ‘buy’ from ‘hold’ on Wednesday, stating prospects had now improved for the group.
Deutsche Bank said commodity headwinds were now turning to tailwinds for 2023, which offered Unilever the potential for margin increases, while many other companies in the market will likely be seeing margins decline.
The German bank, which kept its 4,600.0p target price unchanged, also highlighted that whilst it was still early days, there appeared to be more commitment on behalf of Unilever’s management to spend on advertising and promotion and research and development.
“We expect the market will be prepared to pay a higher multiple for a company that is more fully invested and with better compounding growth prospects than one which is trying to protect profitability,” said DB. “A change in the commodity cycle can enable this change in stance (as well as support from a revised board).”
Reporting by Iain Gilbert at Sharecast.com
