Berenberg raises target price on Reckitt

Reckitt posted group like-for-like sales growth of 7.9% on Wednesday, which was well ahead of visible alpha consensus forecasts of 3.6% - mainly driven by its health and nutrition divisions. At the group level, like-for-like growth was driven by pricing of 12.4% and volume of -4.5%.

Berenberg said this was "an impressive start to 2023" and that, as a result, management "sounded more confident" about the group's growth outlook for the rest of the year, particularly for its nutrition division.

The German bank also highlighted that an anticipated normalisation in consumer mobility in China raised prospects for a better performance by Durex and Dettol.

"For 2023, we forecast lfl sales growth of 6.6% (previously 1.7%) and an adjusted EBIT margin of 23.2% (unchanged). Our EPS forecasts are 3% higher," said Berenberg, which stood by its 'buy' rating on the stock.

"Our investment thesis on Reckitt is unchanged; we remain confident that execution is improving and the stock offers attractive value considering the company's medium-term growth profile, which is comparable to that of peers such as P&G, Nestlé, and Colgate-Palmolive."

Reporting by Iain Gilbert at Sharecast.com