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Reckitt Benckiser is a manufacturer and marketer of branded products in household cleaning and health and personal care, selling a range through over 60 operating companies into around 180 countries. Its product groups include Fabric Care, Surface Care, Dishwashing, Home Care, Health & Personal Care, making up core business together...Read more
Credit Suisse downgrades Reckitt Benckiser to 'neutral'June 28 2012, 6:16pm
In addition, analyst Charlie Mills lowered Reckitt's target price to 3,500 pence per share from 3,800 pence previous.
Today, shares in the group dropped 2.5 percent to close at 3,300 pence.
Mills explained that in the past two to three year, the group has not managed to garner growth from the developed markets, which he was has historically been the main driver behind its outperformance.
He added that this is not expected to change any time soon and any immediate upturn in trading is unlikely.
Mills also pointed out that despite a series of setbacks including disappointing quarterly sales, rising costs and rival Procter & Gamble’s restructuring plan, which is expected to results in cost savings of US$10 billion this year, shares in Reckitt have risen six percent so far this year.
“In part it is market, but market share is also a contributory factor, and competition isn’t about to ease off,” said Mills.
“With a challenging backdrop, and a valuation in line with staples, we reduce our rating to Neutral.”
The analyst expects the group to achieve organic growth of four percent in the second quarter, which would be in line with the first three months of the year.