UBS sees nearly 60% total return potential in Reckitt Benckiser Group PLC (LSE:RKT, FRA:3RB, XETRA:3RB with the Swiss bank repeating a Buy rating and 7,400p price target.
It comes after a meeting with the consumer goods group’s finance chief reinforced confidence in 2026 targets, even as the broker acknowledged the Dettol and Durex owner has become a “show me story”.
UBS’s forecast return comprises 55% price appreciation and a 4.8% dividend yield, implying a total stock return of 59.8%.
“Overall, we noted a strong level of confidence in achieving FY26 targets but acknowledging that Reckitt has de facto become a ‘show me story’ and, as such, that trust has to be rebuilt,” UBS analysts said in a note.
Key to that confidence is management’s view that delivering 4-5% like-for-like growth this year does not rely on a strong flu season in the second half. UBS said the second quarter should show a clear improvement in the US, continued strength in emerging markets and a gradual return to growth for Durex in China. Margins remain under scrutiny.
Reckitt expects adjusted operating margin to be above 24.9% but slightly below 25.6%, with higher oil prices beginning to affect the profit and loss account from June and through the second half. UBS said oil at US$110 a barrel would be manageable, though levels above that “would be harder” to offset.
The broker pointed to several operational bright spots. The US launch of Mucinex 12 Hour is receiving strong retailer support, with more than five additional shelf facings across retailers and channels, compared with the usual one or two for a line extension.
Europe remains the soft patch. Like-for-like sales fell 4.2% in the first quarter, with around a third of the decline attributed to weak cough and cold demand. UBS said improved execution and a reset in cough and cold should drive sequential improvement from the second quarter.
Emerging markets offered a more upbeat counterweight, with India recording double-digit like-for-like growth for a second consecutive quarter. UBS said this reflected broad-based execution across categories rather than the benefit of GST changes.
UBS forecasts Reckitt revenues of £12.62 billion in 2026, rising to £14.82 billion by 2030, with diluted EPS moving from 335.04p in 2026 to 454.41p by 2030.