Reckitt Benckiser should enjoy a more normalised base as it comes out of three years of reinvestment, according to JP Morgan.
The US banking giant has an overweight rating on the stock with a target price set at 7,500p.
As a result, the broker increased the total shareholder returns for Reckitt by 12% to 15% per year through a combination of “leveraging its volumes-driven medium-single-digit top line and increasing cash returns” via buybacks and dividends.
The cornerstone to JP Morgan’s equity story includes evidence of improved execution and share gains as well as cash generation with increasing returns.
The flesh-out of the business has bolstered its market share gains and increased penetration, which should drive positive momentum as the consumer goods giant delivers on its innovation pipeline and benefits from improved pricing position, said the broker.
The stock trades at near three-year lows and at a 20% to 30% discount to peers, noted the broker.