Jefferies continues to see Reckitt Benckiser (LON:RB) as a ‘hold,’ arguing that the group’s move to drop out of the race for Pfizer’s consumer health business is a near-term positive for the shares. The comments came after the consumer goods giant announced yesterday that it had ended discussions with the US pharma giant over the division which comprises a string of over-the-counter treatments, including painkiller Advil.
Investors cheered the news, sending Reckitt Benckiser’s share price rallying 4.78 percent to close at 5,895.00p, and significantly outperforming the broader UK market, with the benchmark FTSE 100 index tumbling 1.23 percent, as investors digested monetary policy decisions by the US Federal Reserve and the Bank of England. The group’s shares, however, have lost a little over a fifth of their value over the past year.
Jefferies sees RB as hold
Jefferies reiterated its ‘hold’ rating on Reckitt Benckiser yesterday, with a price target of 6,370p on the shares.
“Reckitt Benckiser is walking away from Pfizer. We expect this to be a near-term positive for the shares as the market celebrates the avoidance of either leverage beyond the pale or a dilutive equity raise avoided,” Citywire quoted the broker’s analyst Martin Deboo as saying, adding, however, that the challenge for the group beyond that was “to refashion its growth strategy from more organic timber”.
The analyst further pointed out that the company needed to get its ‘growth mojo working again’ but the positive news was that it had “plenty of white space to go for in [...] synergies”.
Other analysts on group
The 21 analysts offering 12-month price targets for Reckitt Benckiser for the Financial Times have a median target of 7,020.00p on the shares, with a high estimate of 8,800.00p and a low estimate of 5,000.00p. As of March 22, the consensus forecast amongst 23 polled investment analysts covering the blue-chip group has it that the company will outperform the market.