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Reckitt Benckiser Group PLC RKT Stock Quote

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Morningstar‘s Stock Analysis RKT

Currency in GBX
Is it the right time to buy or sell?
Is it the right time to buy or sell?

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U.S. Baby Formula Crisis Is a One-Time Boon for Narrow-Moat Reckitt; Shares Fairly Valued

Diana Radu, CFA Equity Analyst

Analyst Note

| Diana Radu, CFA |

With the ongoing U.S. baby formula supply shortage handing wide-moat Reckitt a one-time windfall, we lift our fair value estimate by 8% to GBX 6,700. Stronger performance of the consumer health segment in early 2022 than we’d previously credited and the recent strength of the U.S. dollar also contribute to the upgraded valuation. Dramatic shortages in U.S. infant formula in recent months--following disruption of supply from narrow-moat Abbott--have led to Reckitt markedly ramping-up Stateside production, as well as securing a temporary permit from the Food and Drug Administration (FDA) for the importation of baby formula into the United States. Investors cheered Reckitt’s strong first-half result, driving the stock price decidedly higher. Nonetheless, we view the wide-moat stock as fairly valued relative to our upwardly revised fair value estimate.

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Key Statistics RKT

Company Profile RKT

Business Description

Reckitt Benckiser was formed in 1999 through the merger of the British firm Reckitt & Colman and Dutch-based Benckiser. Recently rebranded under the corporate name Reckitt, it sells a portfolio that includes a variety of household and consumer health brands, such as Lysol, Finish, Durex, and Mucinex, many of which hold the number-one or -two positions in their categories globally. Reckitt has repositioned its portfolio and has entered the infant formula market through the acquisition of Mead Johnson in 2017, expanded its consumer health presence by acquiring Schiff Nutrition, K-Y, and Biofreeze, and has exited the food industry. The firm operates in 60 countries and sells products in more than 200, generating around 35% of sales from emerging markets.

103-105 Bath Road
Slough, Berkshire, SL1 3UH, United Kingdom
T +44 1753217800
Industry Household & Personal Products
Most Recent Earnings Dec 31, 2011
Fiscal Year End Dec 31, 2022
Stock Type
Employees 52,322

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