Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) second-quarter performance may not lag its consumer goods peers, but a material rerating of the stock still feels some way off, according to analysis by Citigroup.
The American bank’s London-based analysts, in a new note, say that second quarter results (due on Thursday 24 July) are likely to highlight strength in the firm’s core emerging markets, notably China and India.
It’s also likely to flag ongoing pricing struggles in the US, Citi added, as well as delays in performance for non-core divisions such as Essential Health and Home.
Citi reckons the company’s operational momentum remains broadly in line with other household and personal care (HPC) names.But, the real prize for investors (a revaluation of core Reckitt assets) hinges on significant events still outside the company’s immediate control.
At present, the broker estimates that Reckitt’s core business is trading at a 15% discount to sector peers on FY25 EV/EBITDA multiples.
To close that valuation gap, two key levers are in focus: either a successful divestment of the Essential Health and Home divisions at a healthy multiple, or a positive shift in Reckitt’s ongoing legal overhang.
The Citi analysts caution that neither of these catalysts is likely to materialise in the near term, leaving investors in limbo despite solid underlying business trends. In short, the note signals that Reckitt’s story remains one of long-term optionality rather than short-term upside.