Broker tips: Unilever, Barclays, St James's Place
By Iain Gilbert
Date: Monday 17 Feb 2025
(Sharecast News) - Berenberg lifted its target price on Unilever from 5,490.0p to 5,640.0p following the consumer-goods giant's 2024 results last week, predicting that "best-in-class growth" from the company will persist in 2025.
Annual figures from the company on 13 February saw underlying sales growth of 4% meet analysts' expectations, with slightly better-than-expected pricing contribution of 1.3% (consensus: 1.1%) offsetting a slight miss with volume/mix growth of 2.7% (consensus: 2.9%).
Underlying operating margins came in at 18.4%, up 170 basis points on the previous year and slightly above the consensus forecast of 18.3%, helping underlying earnings per share rise 14.7% to €2.98, beating the €2.92 forecast.
"In our view, the investment case for Unilever remains strong. A quick review of 2024 highlights Unilever's best-in-class volume growth (2.9%), organic sales growth (4.2%), gross margin improvement (280bp), operating margin improvement (170bp), increase in brand marketing investments (up by 120bp to 15.5% of sales) and 15% EPS growth," said the broker, which has 'buy' rating on the stock..
"While this performance is unlikely to be replicated in 2025, we remain constructive on Unilever, which we expect will continue to deliver above-average growth (in volume, organic sales and EPS) versus industry peers such as Nestlé and P&G."
Berenberg has pencilled in 3.9% organic sales growth in 2025 along with 6% EPS growth, but highlighted that any signs of a turnaround in Unilever's struggling businesses in India, Latin America and Indonesia provide upside risk to these forecasts.
Analysts at RBC Capital Markets took a fresh look at Barclays on Monday following the bank's Q424 earnings, reiterating its 'outperform' rating and 340.0p target price.
RBC Capital Markets said its FY26 adjusted pre-tax profit estimates remain broadly unchanged, as slightly lower income and higher cost estimates were offset by lower impairment charges.
On a divisional basis, RBC Capital said a small increase in pre-tax profit estimates for Barclays Investment Bank, as well as a smaller loss in its Head Office, were largely offset by lower US Consumer Bank estimates.
The Canadian bank also updated its structural hedge modelling and now estimates structural hedge income of £6.1bn/£6.6bn/£6.8bn in FY25/FY26/FY27, respectively.
"Our numbers assume that: i) relative to Q4, BARC's hedge notional falls c. £2bn in 2025 and remains broadly stable thereafter; and ii) 5yr swap rates average 3.7%/3.1%/3.0% in 2025/26/27 (BARC assumption of c.3.5% in FY25), remaining broadly stable at c.3% until 2030," said RBC.
Citi lifted its price target on St James's Place on Monday to 1,280p from 1,010p and reiterated its 'buy' rating as it updated its model ahead of full-year results on 27 February.
"Our FUM estimates increase by 5%, driven by market appreciation and stronger-than-expected Q4 flows," said Citi, which pointed out that this drives a roughly 10% increase to its outer-year cash earnings per share estimates.
The bank also said its H224 underlying cash EPS of 41.1p was 2% above consensus.
"However, our cash EPS is 8-9% above consensus for FY 2026/27, driven by FUM estimates that are 3-4% above consensus," it said. "We model 3.3% net flows for FY 2025. In addition to our estimate changes, our discounted cash flow now fully includes gestation run-off, while we also increase our assumed outer-year profit after tax margin on mature FUM from 25 basis points to 28bp."
This compares to its estimated 27bp margin in 2027 and 31bp in 2028.
"This drives our target price from £10.10 to £12.80, implying 18% total return from the current share price," Citi said.
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