Reckitt’s Growth Prospects and Challenges: Hold Rating Amid Emerging Market Optimism and Margin Expansion Concerns

David Hayes, an analyst from Jefferies, maintained the Hold rating on Reckitt. The associated price target remains the same with p5,500.00.

David Hayes has given his Hold rating due to a combination of factors including the current valuation and growth expectations for Reckitt. The company’s stock has recently been re-rated to a higher multiple, reflecting optimism about its growth in emerging markets. However, sustaining this growth rate above 9% while also expanding margins without affecting developed market performance presents a challenge.
Hayes also notes that while there is positive momentum in emerging markets, particularly with brands like Lysol and Finish, the ability to maintain this trajectory is crucial for further re-rating. The upcoming results will be pivotal in assessing whether the company can continue to deliver on these expectations, justifying the Hold rating as investors await more clarity on future performance.

In another report released on December 15, Morgan Stanley also downgraded the stock to a Hold with a p6,100.00 price target.

Based on the recent corporate insider activity of 20 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of RKT in relation to earlier this year.