Deutsche Bank sees Unilever’s scale providing edge against AI risks

Deutsche Bank raised Unilever's stock rating from hold to buy, and increased its price target to 5,350 pence. Analyst Tom Sykes believes Unilever's scale in content creation and better engagement may provide a competitive advantage over smaller peers in the face of AI risks. The consumer staples sector is currently encountering structural and cyclical challenges, but Unilever's large footprint in this area could prove beneficial.

Deutsche Bank projects steady like-for-like growth of 4.6% in home and personal care for fiscal 2027, with margin expansion of 10 basis points. For fiscal 2028, the bank expects 4.2% growth and a 20 basis point margin improvement. Their earnings per share forecast for fiscal 2027 remains unchanged and aligns with market expectations, while their earnings before interest and taxes are projected to be about 2% higher than consensus.

J.P. Morgan also maintains an overweight rating on Unilever, setting a price target of €65, citing potential earnings progress driven by the company's €1 billion cost-saving goal by the end of 2029. This savings target stems from measures like streamlining the operating model, addressing stranded costs from the planned merger with McCormick & Co, and achieving further reductions through operational simplification, process redesign, and technology adoption.