There’s nothing like a sniffle season to remind investors of Reckitt Benckiser Group PLC's (LSE:RKT, ETR:3RB) place in the bathroom cabinet.
The maker of Nurofen, Dettol and Durex is due to update the market on 22 October, and UBS reckons the numbers will show a business picking up pace after a sluggish start to the year.
The bank forecasts like-for-like sales growth of 7% in the third quarter, well ahead of the 1.9% reported in the spring. That would put Reckitt on track to hit its full-year target of 3-4% growth.
Reported sales, which include the drag from weaker currencies, are expected to come in at £3.6 billion, up nearly 5% on the year.
The standout recovery is Mead Johnson, the infant nutrition arm Reckitt bought in 2017.
It is bouncing back from last year’s supply chain troubles in the US, with sales expected to climb 20%.
The “Core” business, essentially health and hygiene, should also strengthen, helped by a steadier cold and flu market in America and Europe.
Even the Essential Home division, which Reckitt has agreed to sell to private equity firm Advent, is tipped to return to growth.
A healthier sales mix should also lift profitability. UBS thinks the boost from cough and cold products and stronger volumes at Mead Johnson will add to margins, which could end the year above the consensus 25%. That would leave earnings per share about 2% ahead of City forecasts.
At 5,726p, the shares trade on 16 times next year’s expected earnings, a discount of about 16% to European household goods peers.
UBS has a price target of 7,700p, suggesting plenty of upside if Reckitt can keep the momentum going.