Reckitt Benckiser Group PLC Share Forecast October 2021 – Time to Buy RKT?

Shares of the British consumer goods manufacturing company Reckitt Benckiser (LSE: RKT) are in the green today, after closing at 5789p on October 26th (17:50 GMT+1) with a +5.81% surge. Despite the 16% decline in RKT shares for the last 1 year, the sudden soar in the prices can be a probable sign of the company’s first indication of recovery from a prolonged underperformance. Keeping that in mind, does this surge implies a profitable opportunity for investors? Let’s see what’s happening with the RKT shares.

Reckitt Benckiser – Technical Analysis

Going by the financial statement of Reckitt Benckiser, the market cap of the British multinational company is at £39.078 billion with total assets worth £27.725 billion. Whereas the total revenue for the year 2020 was £13.99 billion, it was £12.85 billion a year ago.

With 13 indicators pointing towards a similar action, moving averages for RKT such as Exponential Moving Average (10)(5547), Simple Moving Average (10)(5503), Exponential Moving Average (20)(5569), Simple Moving Average (20)(5553) are indicating a buying move. Oscillators including Relative Strength Index (14)(61), Stochastic %K (14, 3, 3) (59), Commodity Channel Index (20)(146), Stochastic RSI Fast (3, 3, 14, 14)(89), on the other hand, are neutral.

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Recent Developments

Reckitt Benckiser raised its full-year outlook yesterday, citing strong third-quarter sales. It is safe to assume that the recent surge in the share prices is due to this Q3 trading update, released on October 26th, which clearly influenced the sentiment of the shareholders. In the Q3, Reckitt Benckiser Group saw a 10% increase in prices of raw materials throughout its businesses, compared to the predicted 8-9 per cent increase. During the 3rd quarter, increased vaccination rates and enhanced mobility generated more sales for cold and flu medicines, as well as sexual wellness products.

Reckitt Benckiser increased its full-year sales growth target to a range of 1% to 3%, up from a flat to 2% range before. However, the corporation expressed concern about the fourth quarter projection, implying that it could be slower. The Dettol manufacturer reported overall revenue of nearly £3 billion, up 3.3 per cent on a like-for-like basis from the same time the previous year.

The quarter experienced like-for-like sales increase in all three of the firm’s divisions when compared to the previous year’s corresponding period. Despite the fact that estimated growth was low in all three categories, investors appear to be unconcerned.

Should You Buy Reckitt Benckiser Shares?

Reckitt Benckiser, the manufacturer of Lysol cleaning products, surged after raising its full-year estimate, owing to greater sales of cold and flu medicines as well as price hikes, which helped RKT to meet analysts’ third-quarter sales forecasts. Reckitt’s share price has risen somewhat in yesterday’s trade, although it remains well below its prior highs. The stock peaked at £80 in 2017; they are now traded for slight under three-quarters of that price.

Reckitt can still be seen as a profitable investment at this point since two well-known luxury brands – Dettol and Vanish are owned by the company along with other popular consumer goods. This provides it with pricing power, which can aid Reckitt to battle inflation. The corporation has taken significant measures to concentrate on the profitable aspects of its business.

Reckitt is a strong cash-generative corporation with a present dividend yield of 3%. If the corporation continues to recover in the future years, as the report shows, there is a chance of resuming the dividend growth. Reckitt appears to be a quality business when weighed against the risks and its share price may as well rebound if its performance improves.

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