Unilever warns of tough markets

Last night’s trading update from the consumer goods company was something of a double-edged sword.

While Unilever confirmed that it anticipates full-year figures will meet market expectations, it also highlighted how difficult the trading environment has been over the last 12 months and that it felt things were likely to be worse going forward.

In the first hour of trading the share price was hit, as a number of institutions lowered their price targets for the company. These revised targets however are on the whole still considerably higher than the current share price. With a market capitalisation of over £70 billion and a healthy profit-to-earnings ratio of 18.59, coupled with a profit margin over 10%, Unilever will still be regarded as a defensive stock. The hunt for solid returns continues to be a problem for many investment funds, and the dividend yield of 3.53% will ensure that Unilever maintains its place as a core investment for many.

IG clients remain positive towards the stock and, if anything, this morning’s weakness has been seen more as a buying opportunity than anything else, as client accounts are currently running 89% long of this firm.

Unilever chart

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