Reckitt shares rise on HSBC upgrade

Investing.com -- Shares of Reckitt Benckiser Group (LON:RKT ) rose over 2% on Wednesday after analysts at HSBC revised its rating to "buy" from "hold," citing an improved outlook for 2025 after a challenging year for the consumer staples sector.

HSBC analysts noted that Reckitt's valuation has become increasingly attractive, trading at a notable discount compared to its peers. 

They said that the consumer goods company’s resilience in its Health and Hygiene divisions despite operational hurdles in 2024, which included litigation and market-specific challenges. 

The favorable shift in litigation developments and strong underlying performance in key segments were pivotal in the reassessment of the stock.

Going ahead, Reckitt is expected to maintain consistent growth across its core businesses, bolstered by strategic measures to enhance operational efficiency and streamline its portfolio. 

The analysts also expressed optimism about the easing of inflationary pressures and anticipated improvements in consumer demand, which could provide a tailwind for the company’s performance in the coming year.

In their detailed sector outlook, HSBC analysts said that European consumer staples, including Reckitt, had faced challenges in 2024, largely driven by deteriorating consumer confidence in China and broader market pressures. 

However, they argue that the substantial re-rating in the sector now offers a compelling entry point for investors.

With the upgrade, HSBC set a target price for Reckitt Benckiser at 5,500 pence, reflecting an upside of approximately 14% from the stock’s current levels. 

Source: Investing.com