Analyst Note| Philip Gorham, CFA, FRM |
Unilever's solid performance in 2020 continued in the third quarter, with underlying sales growth of 4.4%, which is a full percentage point above our medium-term growth estimate. We are tweaking our near-term estimates to reflect a strengthening currency headwind, but this has no impact on our EUR 50 fair value estimate of the Amsterdam-traded share class or our wide economic moat rating. It reported a solid first-half 2020, all things considered, with flat sales and impressive margin expansion. We are making minor alterations to our forecasts but reiterate our EUR 50 fair value estimate for the Amsterdam-traded share class and wide moat rating. Unilever is now trading at our fair value estimate, and we see greater value in other categories such as brewing and tobacco. Having said that, the company owns a number of brands that have benefitted from the changes in consumer behaviour during the coronavirus pandemic, and the stock has been relatively defensive this year. Investors fearful of a second wave may regard Unilever as being a relatively safe haven over the next 12 months.