The Unilever share price has pulled back this week as investors assess the impact of Nelson Peltz entry to the company’s board. The ULVR stock is trading at 3,696p in London. This is about 3.5% below the highest level last week. Meanwhile, UL shares are trading at $46.75 in New York, valuing the company at over $118 billion.
Unilever is a leading consumer staples company that sells important and vital products worldwide. The firm sells over 400 brands globally. Some of the most notable ones are Lux, Dove, Comfort, Axe, and Vaseline. These products are in food and refreshments, beauty and personal care, home care, and vitamins. Therefore, since these are staples, people will always buy them regardless of the state of inflation.
Like Procter & Gamble, Unilever has reacted to the ongoing inflation pressures by hiking prices. But, like Walmart and Target have revealed, there is a limit to how companies can boost prices.
Still, there is a possibility that some of the input prices are now peaking. Unilever spent about 17 billion euros in input costs in 2021. 15% of these costs went to palm products that are used to make detergents and cosmetics. A closer look at data shows that palm oil prices have declined by more than 15% from their highest level this year. The decline happened after Indonesia removed a ban on exports.
Agricultural costs represent about 26% of the total costs. The crisis in Ukraine has made commodity prices higher while crude oil and natural gas prices have jumped. This could affect Unilever’s margins in the short term. However, the company is expected to keep prices relatively higher when input costs fall, which will lead to higher margins.
The daily chart shows that the ULVR stock price rose sharply last week after Nelson Peltz entry into the company’s board. As it rose, the shares moved above the descending trendline shown in black. The stock has moved above the 25-day and 50-day moving averages. In addition, the Stochastic Oscillator has moved below the overbought level.
Therefore, there is a likelihood that the Unilever share price will keep rising in the coming weeks. If this happens, watch’s next key resistance level will be at last week’s high of 3,836p. A move below the support at 3,640p will invalidate the bullish view.
This post was last modified on Jun 08, 2022, 08:36 BST 08:36