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20 Oct 2020
Q320 sales and 15 questions for management
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Q320 sales and 15 questions for management
Reckitt Benckiser Group plc (RKT:LON) | 4,612 46.1 0.0% | Mkt Cap: 32,494m
- Published:
20 Oct 2020 -
Author:
Omanadze Mikheil MO | Stent Jeff JS | Vesterinen Heidi HV | Karia Vyoma VK -
Pages:
12
Summary of Q320 sales
While the market was braced for a beat, +13.3% LFL sales growth (co. cons +9.5%) was still very much at the top-end of anticipated outcomes. As to the source of the beat, both Health (+9.1% vs. co. cons at +6.0%) and Hygiene (+19.5% vs. co cons +15.2%) were meaningfully above consensus expectations. Coupled with an upgrade to FY20 LFL sales guidance (from high-single digit to low-double digit growth) and management exuding confidence, we can find no cause for complaint.
News
We highlight that Reckitt commented that it believes that it will hit its mid-term revenue growth target a year earlier than expected and with greater certainty.
Earnings
We revise our FY20e/FY21e/FY22e EPS by c.+3-4%, the variance being principally attributable to increased organic growth and margin assumptions.
Investment thesis
We are attracted to Reckitt due to its defensive turnaround properties and scope for strategic optionality over the mid-term.
Rating/ target price
We maintain our Outperform rating. Our target price moves from GBP86 to GBP88.
15 questions for management
Given that no country has lived with Covid-19 for more than 12 months, how can you be confident that some changes in consumer behaviour are likely to endure?