Credit Suisse upgrades more confident Unilever

A more confident management team is being credited for Credit Suisse upgrading consumer goods company Unilever from ‘underperform’ to ‘neutral’.

In a note released by the investment bank on Tuesday, it upgraded the stock and also raised the target price from €39.50 to €41.

“We encountered a management team at Unilever's investor seminar in SE Asia last week that has discernibly grown in confidence versus 12 months ago, notwithstanding a still challenging emerging market environment,” it said.

It said it believed the company had been doing sensible things for several years in terms of organisational evolution, resource allocation, productivity improvements and strategic focus.

However it noted that the group is no longer playing catch-up but is now starting to “set the agenda”.

“In SE Asia Unilever is growing - already healthy - market shares (42% across all its categories), at a time when other multi-nationals appear to be ceding share to local players.

“Unilever is increasingly leveraging its scale by investing in IT and digital marketing and by combining consumer insight with its R&D capability to drive fewer, bigger innovations.

With the improvement in competitiveness, its re-leveraging potential, a bottoming-out in emerging market and the expectation of a limited near-term emerging market currency headwind, Credit Suisse said it no longer expects Unilever to underperform the consumer staples sector.

Shares on the Euronext Amsterdam were up slightly on the news, rising €0.08 (0.2%) to €40.69 at 1138 CET, while shares on the London Stock Exchange were up 15p (0.53%) to 2,867.00 at 1037 GMT.