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What’s next for Unilever after share price tanks due to sales slump

The British-Dutch consumer goods company has seen its share price nose dive this week after warning investors it will miss its full-year sales targets.

Unilever shares have fallen by more than 7% since Tuesday, after the company warned investors it will miss its full-year sales targets.

The British-Dutch consumer goods company said that it expects underlying sales growth for the full year and the first half of 2020 to come in at the lower end of its 3% - 5% multi-year range.

‘We have maintained momentum in the quarter, with a good balance between volume and price,’ Unilever CEO Alan Jope said. ‘Emerging markets and Home Care have been the key growth drivers.’

‘We will step-up competitive top line performance through innovation and portfolio evolution to serve the faster growing geographies and channels,’ he added.

Unilever closed at £42.78 a share on Wednesday.

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Analysts mixed about Unilever’s price trajectory

In the wake of Unilever’s Q3 trading update, Goldman Sachs and Barclays both maintained their respective ‘buy’ and ‘underweight’ ratings for the stock. However, the pair did downgrade their price targets to £50 and £40.80 respectively.

Based on Unilever’s closing price on Wednesday, analysts from both banks are mixed about the direction the stock travel.

Goldman Sachs believes it has a potential upside of 16.8%, while Barclays thinks it could fall by as much as 4.6%.

‘Before the latest trading update, the shares traded on 19.6x expected earnings, some way above the ten-year average,’ Equity Analyst at Hargreaves Lansdown Sophie Lund-Yates said.

‘If profit growth were to slow investors would struggle to justify that rating, leading to a painful fall in the share price.’

‘Still, for those prepared to take the long view, we think Unilever has the potential to be rewarding, although there are no guarantees,’ she added.

You can go long or short Unilever with IG using derivatives like CFDs and spread bets.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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