Date: Thursday 28 Jun 2012
Consumer products group Reckitt Benckiser was under the weather on Thursday morning after Credit Suisse downgraded its rating on the stock from 'outperform' to 'neutral'.
"Reckitt’s historical outperformance in the marketplace was driven by its almost unique ability to garner growth from the developed markets, and in particular Europe," the broker said in a research note.
"This hasn’t been the case for two to three years now, and we don’t see that changing any time soon. In part it is the market, but market share is also a contributory factor, and competition isn’t about to ease off."
Reckitt manufactures many well-known household products and cosmetics, including Finish, Cillit Bang, Dettol and Clearasil.
Credit Suisse has lowered its 2013 and 2014 earnings per share estimates by 7% due to foreign exchange and decreased operating assumptions in Europe and the US in particular. As such, the target price comes down to 3,500p from 3,800p.
The broker notes that the shares are up 6% in 2012 so far in spite of having "a lot thrown at them this year", including: index reweighing; large share placings; weak first-quarter sales; sector peer Proctrr & Gamble set to kick-start its business; generic version of its Mucinex launched; raw material headwinds.
"With a challenging backdrop, and a valuation in line with staples, we reduce our rating to 'neutral'," the broker said.
Shares were down 2.58% at 3,290p by 11:17.
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