Broker snap: Emerging markets opportunity for Reckitt

29th Jan 2010 09:48

It is time to consider emerging opportunities at Anglo-Dutch household goods maker Reckitt Benckiser, claims HSBC.The bank notes that Reckitt's price/earnings ratio relative to its peers is close to a six year low, 'even adjusted for Suboxone,' the company's heroin substitute drug for which it lost its exclusive licence in the USA at the end of 2009.'We see short-term time value in Suboxone and long-term opportunities for household business in emerging markets once income per capita allows penetration rates to increase,' HSBC said.The price target for the stock has been upped by HSBC to 3720p from 2720p 'on undervalued execution-led growth prospects and potential emergence of a D&E [developing and emerging markets] multiplier effect,' while the investment recommendation has been upgraded to 'overweight' from 'underweight'.