- Barclays upgrades Unilever to ‘Overweight’
- Berenberg downgrades IHG to ‘Hold’
- Citi cuts target price for Diageo
Barclays upgrades Unilever to ‘Overweight’
Barclays upgraded Unilever LON:ULVR to ‘Overweight’ from ‘Equalweight’ last week and lifted the target price to 4,600p from 4,300p. The broker is positive about the vision of the new CEO for the FTSE 100 consumer goods business, suggesting “There’s much to do and it will take time but new CEO Hein Schumacher comes across as a real operator who understands the challenges…It’s early days, but our sense is that Hein Schumacher has the best chance of actually delivering on the promises that long-standing Unilever observers have heard numerous times before.”
The new strategy was likened to that of Procter & Gamble with the broker noting “Unilever is now talking about brand superiority across every vector, not just technical superiority which is what it was anchored on before. Consumers care about every aspect of brand, not just whether the technical efficacy is superior to the competition…Unilever is also now talking about really differentiated R&D and consumer insight that can be scaled, which drives category growth not just ‘stealing share’. Obviously, saying this and doing it consistently are two different things but we were encouraged by the clarity on this crucial point.”
Unilever shares were trading at 3,912p at the time of writing, down 6.7% this year and down 3.0% over the last 12 months.
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Berenberg downgrades IHG to ‘Hold’
Berenberg has downgraded InterContinental Hotels LON:IHG to ‘Hold’ from ‘Buy’ and reduced its target price to 6,000p from 6,500p this week.
The broker noted it remains bullish on the long-term structural growth drivers of the hotel industry with IHG still well placed to benefit from them. However, it felt that the shares were fairly valued at current levels while financing challenges and the geopolitical backdrop posed short-term risks.
IHG shares were trading today at 6,002p, up 24% this year and 25.8% over the last 12 months.
Citi cuts target price for Diageo
Citi has cut its target price for Diageo LON:DGE to 3,050p from 3,600p this week, reiterating its ‘Neutral’ rating. The target price has been cut following Diageo’s warning on first-half profits, citing a “materially weaker” performance in Latin America and the Caribbean, with sales in the region expected to decline by more than 20% year-on-year in H1 2024. The FTSE 100 beverages company has seen sales impacted by macroeconomic pressures leading to lower consumption and consumer downtrading.
Following the biggest one day fall in its history, the broker noted that “the valuation de-rating of spirits appears to be largely complete and Diageo’s buyback should provide a floor for the stock, but with LatAm destock issues possibly lingering into H2 24E and given cuts to H1 24E US OSG, it is not yet certain these Diageo downgrades will be the last.”
Diageo shares were trading today at 2,922.5p, down 19% this year and by the same percentage over the last 12 months.
