Broker snap: Credit Suisse upgrades Unilever on medium-term outlook

17th Dec 2012 12:16

Credit Suisse has upgraded its recommendation for consumer goods giant Unilever from 'underperform' to 'neutral' on the back of the company's new strategy to focus on revenue growth."Unilever has made no secret of its desire to give top billing to revenue growth. The target is to double sales?no time frame but it is a change in mind-set for a group where revenues did not move for a decade," the broker said on Monday morning. "This is a major change for a group that historically has chosen margin over sales - and we think the business looks all the more healthy for it."Credit Suisse reckons that this commitment to sales growth is now "well embedded" and the momentum is good enough to raise its long-term sales growth estimates "closer to 6%".Nevertheless, the broker highlighted that Unilever needs to reinvest to sustain this growth."Our problem remains the valuation - at 18 times 2013 earnings the shares are rated at the top end of staples, with a prospective total shareholder return nearer the the peer average".The target price for the shares has been raised from 2,100p to 2,400p.BC