Reckitt Benckiser share price drifts lower as Jefferies trims rating

By: Tsveta van Son
Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree… read more.
on Jan 24, 2019
Updated: Mar 11, 2020

Shares in Reckitt Benckiser (LON:RB) have fallen deep into the red in today’s session, as Jefferies lowered its rating on the consumer goods group. The move comes after earlier this month, the company’s chief executive Rakesh Kapoor unveiled plans to step down from the group.

As of 10:49 GMT, Reckitt Benckiser’s share price had given up 3.20 percent to 5,598.66p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.24 percent lower at 6,826.31 points. The group’s shares have lost nearly 19 percent of their value over the past year, as compared with about a 10.6-percent drop in the Footsie.

Jefferies trims rating on RB

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Jefferies lowered its rating on Reckitt Benckiser from ‘hold’ to ‘underperform’ today, and slashed its price target on the shares from 6,800p to 5,000p. Proactive Investors reports that the analysts are concerned that the weak cold and flu season in the season could hit sales of some of the consumer goods giant’s big brands such as Strepsils, Lemsip and Nurofen.

The broker’s biggest issue, however, is with the company’s workplace culture, especially after news of the CEO’s pending departure.

“The surprise retirement of CEO Rakesh Kapoor crystallises long-brewing anxieties around RB’s predicament,” the broker pointed out. “There are strong runners and riders for the role aplenty. But this is a challenge beyond mere fresh legs. The unique RB pay for performance model, so powerful for so long, is now under pressure, laying bare the fact that RB has the weakest culture and workstyle ratings in the peer group.”

Other analysts on company

The 17 analysts offering 12-month price targets for Reckitt Benckiser for the Financial Times have a median target of 7,090.00p on the shares, with a high estimate of 9,000.00p and a low estimate of 5,100.00p. As of January 19, the consensus forecast amongst 21 polled investment analysts covering the consumer goods group advises investors to hold their position in the company.

As of 10:57 GMT, Thursday, 24 January, Reckitt Benckiser Group Plc share price is 5,598.66p.

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