In major news on UK stocks, shares of Reckitt Benckiser Group PLC (GB:RKT) sank after the company reported a 1.2% decline in like-for-like (LFL) net revenue in Q4 2023, missing analysts’ consensus estimate of 1.6% growth. Additionally, it faced a £55 million annual revenue setback due to a compliance issue and an inquiry into its Middle East operations. Following the release of its final results for 2023, Reckitt’s shares plummeted by nearly 10%, marking their most substantial single-day decline since December 1999.
Reckitt is a multinational consumer goods company specializing in health, hygiene, and nutrition with brands like Dettol, Harpic, Lysol, Strepsils, etc.
“Unsatisfactory” Fourth Quarter
Reckitt’s CEO Kris Licht called the company’s fourth-quarter performance “unsatisfactory.” In Q4 2023, Reckitt’s LFL net revenue for its Nutrition segment decreased by 14.8%, while the Health segment’s top line declined by 2%. In contrast, the Hygiene segment reported a growth of 5.2%.
During the fourth quarter, the company discovered a discrepancy in reporting trade spending in two Middle Eastern markets, affecting its results. Nonetheless, the company affirmed that this would not influence its outlook for 2024 or its other mid-term objectives.
For the full year, Reckitt’s net revenue of £14.6 billion saw a growth of 3.5% on an LFL basis. The increase was primarily driven by a price increase of 7.8%, although it was partially offset by a 4.3% decrease in volumes.
Analysts’ Reactions
Analyst Andy Jones from RBC Capital stated the results were “grim rather than just poor.” Jones mentioned that he was expecting weak numbers, but the Middle East impact came as a surprise. However, Jones remains bullish on the share price prospects and confirmed his Buy rating with a forecast of a 37% upside.
Similarly, analysts from J.P. Morgan, UBS, Barclays, and Bernstein also reiterated their Buy ratings on the stock.
On the contrary, Jefferies analyst David Hayes assigned a Sell rating to the stock, predicting a downside of 9.5%. Hayes expressed disappointment with the Q4 results, highlighting the shortfall in volumes and sales growth.
Is Reckitt Benckiser a Good Stock to Buy?
According to TipRanks’ analyst consensus, RKT stock has received a Moderate Buy rating backed by a total of 11 recommendations. The Reckitt share price forecast is 6,337.27p, which is 25% higher than the current price level.
