Reckitt Stock Price Up 6% To 5810p After Reporting Upbeat Third Quarter
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- Reckitt stock price surged 6% on Tuesday Morning to trade above £5,800 for the first time in over a month.
- Reckitt Benckiser Group reports higher than expected sales during the third quarter.
- Positive fundamentals and holding above the 50-day SMA are crucial to RKT/BGX pair sustaining the bullish momentum.
The Reckitt stock price has surged 6% over the last 24 hours to 5810p following a sharp decline over the last couple of days as investors expected a decline in sales in the third quarter report of their 2021 fiscal year.
On Tuesday, the Reckitt Benckiser Group raised its full-year forecast after reporting higher than expected sales during the third quarter. The sales increase are reported to have been driven by price hikes and a rise in demand for the company’s sexual wellness products as well as Mucinex cold and flu remedies.
The group reported that improved mobility and higher vaccination rates during the third quarter were the driving force behind the company’s demand for Durex condoms and Mucinex cough syrups.
This sent the RKT shares up 7.22% on Tuesday morning to trade above 5840p, making it the top gainer among the healthcare stocks on the FSTE100 index.
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Reckitt Stock Price To Hold Above The 50-DAY SMA
The RKT stock price hovers around 5810p on the London Stock Exchange (LSE). The share has increased by approximately 6% over the last one week, however, it has declined 2.36% over the last one month. The daily trading volume stands at around 663 000 while its market capitalisation, which had earlier crossed the £40 billion mark has now come down to £39,077 billion.
RKT/GBX Daily Chart
The Reckitt Stock price is currently trading in the green and appears to be fighting immediate resistance provided by the 5851p resistance level. Note that a break above this level could see the Lysol cleaning products maker price soar to tag the 5900p psychological level.
A clear bullish breakout above this level could see RKT/GBX pair rise to tag the 100-day Simple Moving Average (SMA) at 5926p and the 200-day SMA at 6140p respectively.
Note that the sharp upward movement of the Relative Strength Index (60.63) away from the oversold zone indicates that the bulls are in control of the healthcare stock price.
Moreover, the position of the Moving Average Convergence Divergence (MACD) indicator line (blue) above the signal line (orange) suggest that the Reckitt market sentiment is positive. Also note that the MACD sent a buy shares signal yesterday when the 12-day Exponential Moving Average (EMA) crossed above the 26-day SMA. This points to a bullish market momentum.
On the flipside, if the RKT stock price falls below the immediate support at £5,683, the price could slide below the 50-day SMA at 5656p to tag the 5600p psychological level. A drop below this point could trigger massive sell orders that could see Reckitt price per share tank towards the October 05 low below 5400p.
Therefore, holding above the 50-day SMA at 5656p is crucial for RKT bulls to ensure that current bullish momentum is sustained.
Note that RKT faces stiff resistance upwards posed by the 100-day and 200-day SMA which adds credence to the pessimistic outlook. Also the position of the MACD below the zero line at -35 shows that the bullish momentum is still weak.
Positive Fundamentals To Boost The Reckitt Stock Price
Positive fundamentals are usually a great guide to the best shares to buy. If Reckitt’s higher-than-expected sales spill over to the fourth quarter, the firm’s growth rates will accelerate significantly compared to previous quarters.
Demand for over-the-counter medicines, particularly Mucinex cough and cold remedies, has been the primary cause of this acceleration and the market remains positive that this might a long-term phenomenon.
Sales of over-the-counter medicines rose by approximately 20% in the third quarter, after a strong cold and flu season saw sales across Reckitt’s market rise above its 2019 levels.
Improved mobility in market such as India has seen a spike in the sales of the firm’s sexual wellness products such as the Durex condom, explained Laxman Narasimhan, Reckitt’s CEO on a media call.
According to company-supplied estimates, this led to a surprise 3.3% spike in like-for-like sales for the third quarter, compared to the 0.7% drop analysts had expected. Note that this excluded sales from Reckitt’s recently completed sale of infant nutrition business in China.
The company also raised its full-year net revenue like-for-like sales growth forecast to 1-3% from flat to up 2% earlier, but warned that growth would be “softer” in the fourth quarter.
Reckitt said it was facing a sharp increase in the cost of raw materials, which were up by 10% in the third quarter, compared to the previous estimates of 8-9% increase.
However, the FTSE-listed giant kept its adjusted operating profit margin forecast, excluding IFCN China, for the year in the range of 22.7% to 23.2%.
