Reckitt Benckiser (GB:RKT) took the market by surprise with the announcement of its CEO, Laxman Narasimhan, stepping down – with the news coming as a shock to investors and analysts as he has only been in the post for three years.
The company stated Narasimhan’s resignation is based on personal reasons and he wants to relocate to the U.S. He will join Starbucks (Nasdaq:SBUX) in the U.S. as the chief executive, replacing Howard Schultz.
Narasimhan said: ‘I have been offered an opportunity to return to the United States, and although it is difficult to leave, it is the right decision for me and my family.’
Narasimhan, who joined Reckitt in 2019 as CEO, has led the company through a painful period of COVID restrictions. Under his leadership, the company was able to overcome supply disruptions and is now dealing with rising inflation.
Reckitt has named Nicandro Durante as the successor on a temporary basis, while the search continues for the leadership role.
Durante currently serves as a non-executive director at Reckitt and has previously worked in various top roles at cigarette manufacturer, British American Tobacco (GB:BATS).
Following the news, share prices fell 5.4%, making them the top fallers in the FTSE 100.
Bruno Monteyne, an analyst at Bernstein, said, “We are surprised to see him go, given the extent to which investors and the company have come to the conclusion that the new team’s strategy is paying off.”
Monteyne reiterated his Hold rating on the stock yesterday with a target price of 6,400p.
Tineke Frikkee, fund manager at Waverton Investment Management, said, “Whilst it is understandable that for family reasons he is moving back to the US, it is surprising that it is immediate, rather than serving his notice period.”
Is Reckitt Benckiser a good stock to buy?
According to TipRanks’ analyst rating consensus, Reckitt Benckiser stock has a Moderate Buy rating. The stock has ratings from 13 analysts, out of which 10 are Buy, two are Hold, and one is a Sell recommendation.
The RKT price target is 7,580.7p, with an upside potential of 20.3%. The analyst price targets range from a low of 6,100p to a high of 9,500p.
Just when the shareholders were happy with the company’s strategies and the cost management issues, the CEO is gone. It’s now a question of waiting until the company finds a new boss.