Raising Our Fair Value Estimate for Wide-Moat Unilever

Business Mayor

21-05-2025

Editor's Note: This analysis was originally published as a stock note by Morningstar Equity Research.
We are transferring coverage of Unilever ULVR, a leading global player in home and personal care, and packaged foods, with significant exposure to emerging markets, accounting for 58% of revenue in 2024.
The bottom line: We raise our fair value estimate by around 3% to EUR 59/GBX 4,940/USD 66. We maintain our wide economic moat, standard capital allocation, and Low Morningstar Uncertainty ratings. At current levels, shares offer a modest upside of around 6%.
Over the past 18 months, Unilever's shares have risen about 25%, driven by a strategic reset focused on driving productivity savings and stepping up brand and marketing investment and innovation efforts to rekindle volume growth.
The wide moat rating reflects Unilever's strong retailer relationships, brand strength across some key categories, particularly in personal care, and cost advantage stemming from its scale and operational efficiency.
Big picture: Under new CEO Fernando Fernandez, the company is embarking on the next stage of its transformation. Fernandez's agenda focuses on sharper market execution and more impactful, scaled innovations to improve brand appeal in an increasingly fragmented competitive landscape.
Management targets consistent volume growth of at least 2%, supplemented by premiumization efforts to drive mid-single digit organic sales growth, alongside modest operating margin accretion led by gross margin gains.
This is supported by continued portfolio rotation toward higher growth categories like beauty and wellbeing, as well as the company's strong presence in emerging markets where population growth, urbanization, and rising incomes should support long-term demand. Read More Nvidia GTC 2025: Winners & Losers
Key stats: We model 3.8% organic sales growth, including 2.2% from volume. Our 2029 operating margin forecast is 18.9%, 50 basis points ahead of 2024, reflecting a 100-basis-point contribution from gross margin and overhead reduction, partly offset by brand and marketing reinvestment.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
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