Jefferies analyst David Hayes maintained a Hold rating on Reckitt (RKT – Research Report) today and set a price target of p5,100.00.
David Hayes has given his Hold rating due to a combination of factors affecting Reckitt’s performance. The company reported a miss in its organic sales growth for the fourth quarter of 2024, alongside a conservative guidance for 2025, which was below market expectations. Despite a positive performance in margin improvements, driven by cost savings and reduced advertising and promotion expenses, these were overshadowed by the sales shortfall.
Hayes points out that while margin improvements can support earnings, they raise concerns when sales do not meet expectations or when future guidance is not optimistic. Reckitt’s valuation, trading at approximately 17.5 times price-to-earnings, suggests a need for consistent growth above 4%. Achieving this may require further sacrifices in gross or operating margins to unlock new sales opportunities, leading to the Hold rating as the company balances these challenges.
In another report released on March 7, Barclays also maintained a Hold rating on the stock with a £56.00 price target.