.August 22, 2024 11:29:00 AM

Unilever (NYSE:UL) saw a more than 2% increase in shares today after Bank of America upgraded the stock from Underperform to Buy. The investment bank predicts Unilever’s organic growth to reach a CAGR of 4.6% from 2024 to 2027, driven by a favorable product mix and increased market share. This growth is expected to boost Unilever’s EPS CAGR to 10% for 2023-2026, compared to just 1.5% between 2020-2023. The anticipated separation of Unilever’s Ice Cream business by 2025 is seen as a catalyst for the company to focus on higher-growth categories, enhancing returns and cash flow.

The Ice Cream division is projected to trade at around 10 times its estimated 2025 EBITDA, potentially reducing risks if the business underperforms. Unilever’s remaining operations, known as “RemainCo,” are expected to outperform industry averages with superior margins, higher growth rates, and a 250 basis point advantage in EPS CAGR. Bank of America highlights Unilever’s focus on “power brands” and innovation-led strategies as key drivers of future volume growth and improved performance across its portfolio.