In major news on UK stocks, Unilever PLC (GB:ULVR) shares soared following a strong Q1 trading update released by the company. Unilever reported a 4.4% increase in sales for the first quarter, surpassing analyst expectations of 3.5%. Unilever shares were trading up by almost 6% as of writing.
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The results were in contrast to those of the company’s Swiss competitor Nestle SA (DE:NESM), which fell short of its sales targets due to a lacklustre performance in North America. This signalled a turnaround for the British FMCG giant, which had been trailing its Swiss rival for years.
Unilever is a leading consumer goods company offering a diverse range of products across nutrition, hygiene, and personal care segments.
Unilever’s Power Brands Lead the Way
Unilever’s underlying volume growth rose to 2.2% from 1.8% in Q4 2023. However, underlying price growth of 2.2% was slightly down from 2.8% in the previous quarter. The volume growth was mainly driven by the company’s power brands, which contribute 75% of its turnover. Unilever reported a 6.1% growth in the underlying sales and a 3.8% rise in volumes of its power brands, with notable performances from Dove, Knorr, Rexona, and Sunsilk.
The company also highlighted its restructuring plan launched in March, which involved splitting its ice cream business as a standalone entity. The company stated that the plan remains on track and is scheduled to be completed by the end of 2025. Through this initiative, Unilever aims to accelerate growth, cut down its costs, and establish a leading ice cream business.
ULVR maintained its full-year 2024 guidance, with underlying sales growth expected in the range of 3% to 5%, driven by an increasing contribution from volume growth.
Is Unilever a Good Stock to Buy?
Following the Q1 update, analysts from UBS and Jefferies maintained their Sell ratings on ULVR stock. Meanwhile RBC Capital reiterated its Hold rating.
Overall, ULVR stock has received a Hold consensus rating based on 12 recommendations, including two Buy, five Hold, and five Sell recommendations. The Unilever share price target is 3,988.18, which is 2.08% below the current trading price.
