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Deutsche Bank sees more upside at Unilever after strong annual results

(Sharecast News) - Deutsche Bank has kept a 'buy' rating for consumer products group Unilever, saying that while risks remain there is still earnings growth potential within the group after a solid 2023 performance. The stock rose strongly on Thursday after annual results showed full-year underlying sales grew by 7% in 2023, with underlying operating profit rising 2.6% as underlying operating margins improved 60 basis points to 16.7%.

"Gross margin surprised to the upside as did volume growth and this before the new management have fully mobilised their action plan," Deutsche Bank said in a research note.

"There remains a high skew between the outperformers and underperformers in the group which could provide some volatility, but we see Unilever progressing towards a steadier compounding performance under the new management's action plan."

The stock, which trades at 17.8 times 2024 earnings, is currently valued at an 11% discount to the weighted average multiple across the global food/household and personal care sector - a discount "which we regard as too high", the bank said.

The shares, having gained 3% the previous day, were 0.4% at 4,008.44p by 1030 GMT on Friday, with Deutsche Bank's target price of 4,600p indicating further upside.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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