Broker snap: Cadbury shareholders switch to Unilever

22nd Jan 2010 12:07

For the thousands of UK-based Cadbury shareholders unwilling to hold Kraft stock following the American's hostile takeover should look at Unilever, says Charles Stanley.Charismatic new CEO Paul Polman has overseen £2bn of disposals and is masterminding £3bn of reinvestment and restructuring at the PG Tips to Lynx aftershave firm.The broker is looking for full-year sales of £35.87bn, reflecting organic sales growth of 3.4% and 1.6% pricing, plus a 20 basis point increase in adjusted operating margins to 14.8% when it reports results on 4 February.Given recent share price strength, it suspects these results are already factored into prevailing valuations. 'Trading off a mere 1.5x enterprise value (EV)/sales multiple we look for at least 20% share price upside over the medium term,' says analyst Jeremy Batstone-Carr who maintains his 'accumulate' recommendation on the shares.