RECKITT BENCKISER GROUP PLC: A great company to hold/BuyReckitt Benckiser Group Plc (Reckitt), a leading global consumer goods company manufactures and markets well-known household and health brands, including Air Wick, Calgon, Cillit Bang, Clearasil, Dettol, Durex, Enfamil, Finish, Gaviscon, Harpic, Lysol, Mortein, Mucinex, Nurofen, Nutramigen, Strepsils, Vanish, Veet, and Woolite. The company operates across three main segments: Hygiene, Health, and Nutrition. Reckitt has demonstrated impressive resilience in its core business, recently exceeding market expectations. This led to an upward revision in its full-year like-for-like revenue growth guidance, while maintaining earnings per share projections—contrary to what many investors anticipated. As a result, the share price has since reacted positively, reflecting confidence in the company's fundamentals.
Currently, Reckitt's shares are trading well below their long-term historical averages, presenting what we see as a compelling entry point for long-term investors. The stock has been in a correction phase since the year 2016 and is now near the same levels it was trading in 2026. Just recently, in July 2025, Reckitt announced that it was proceeding to sell a majority stake in its Essential Home cleaning products division to Advent International for up to $4.8 billion, a move that is seen to align with the company's strategy to focus on consumer health and hygiene brands (The British consumer goods company is refocusing its portfolio on core brands which bring in the bulk of its sales). This sale should provide some relief after market volatility threatened to derail a deal. We believe the current undervaluation does not reflect the underlying strength of the business, which could drive meaningful gains as positive catalysts emerge over the coming months.
Additionally, in a move to enhance returns, Reckitt announced a new £1 billion share buyback program on July 28, 2025, set to run over the next 12 months. This initiative aims to reduce the company's share capital and directly benefit shareholders. We view this as a supportive development that could help stabilize and uplift the share price in the short term. Based on our analysis, we maintain a medium-term price target of 8,000 GBX, reflecting confidence in Reckitt's trajectory. Looking ahead, Reckitt is targeting 19% growth by 2027 through focused strategies designed to streamline operations and capitalize on emerging opportunities. Key initiatives include:
Simplifying the Operating Model: Reducing management layers to enhance agility (implemented in early January 2025).
Refining Scope and Building Capabilities: Integrating expertise directly into key markets for better performance.
Cost Efficiency: Targeted reductions to improve overall profitability.
Innovation via Digital and AI: Exploring new avenues through generative AI and digital tools to drive future expansion.
These efforts position Reckitt for sustained growth, combining operational improvements with forward-thinking innovation. We see the current prices as a perfect entry point both for short, medium- and long-term investors. The company has maintained that its fuel for growth program is ahead of plan and reiterated its medium-term guidance for core Reckitt to consistently deliver +4% to +5% net revenue growth. We believe that the business is well anchored in growth industries across health and hygiene. The business brands position the company as a solid investment for consideration.
