Berenberg sees scope for greater returns at Unilever (LON:ULVR), the analysts have said. The comments came after the Anglo-Dutch consumer goods giant recently published the outcome of its shareholder review, announcing plans to offload some spread brands and return cash to shareholders.
Unilever’s share price rose in yesterday’s session, shedding 0.59 percent to 4,065.50p, underperforming the broader London market, with the benchmark FTSE 100 index shedding 16.51 points to close 0.22 percent lower at 7,348.99. The group’s shares have gained more than 25 percent over the past year, and are up by some 23 percent in the year-to-date.
Berenberg reiterated its ‘buy’ recommendation on Unilever yesterday, arguing that shareholders at the Anglo-Dutch consumer goods giant will benefit from short-term share buybacks following the group’s strategic review.
“Unilever kicks off with a €5 billion buyback in 2017. Even factoring in €2 billion for bolt-on mergers and acquisitions, Unilever could return an additional €5 billion in 2018. Our earnings per share forecasts include a €9 billion buyback in 2018, factoring in a €6-billion sales of spreads,” the broker’s analyst James Targett commented, as quoted by Citywire, adding that much of the outcome of the strategic review was expected and “the continued reinvestment in growth means the risk to organic sales growth is limited”.
The comments followed Unilever’s strategic review, prompted by Kraft Heinz’s failed bid earlier this year.
As of April 11, the consensus forecast amongst 21 polled investment analysts covering Unilever for the Financial Times has it that the company will outperform the market. According to MarketBeat, the Marmite owner currently has a consensus ‘hold’ rating and an average price target of 4,013.70p. Unilever is scheduled to update investors on its first-quarter performance on April 20.