Broker snap: Impressive outlook for Reckitt Benckiser

2nd Nov 2010 11:18

Strong pharma growth and impressive margins has seen Panmure Gordon (PG) retain its 'buy' recommendation for Reckitt Benckiser, the provider of consumer healthcare and household products.Despite the three months to September being seen as, to many, Reckitt's most challenging quarter, the results impressed the broker. Along with its strong 33% growth in prescription pharmaceutical sales, base earnings before interest, tax, and amortization margins rose by 110 basis points (one basis point = one hundredth of a percent), well ahead of PG's 20bp forecast."Group margins rose by 220bp to 26.7%, again well ahead of our 25.1% forecast and consensus of 25.6%," the broker said.Additionally, earnings per share growth was much stronger than the broker expected, rising by 18% to 58.4p, versus PG's forecast of 54.8p.The broker has increased its current year earnings per share growth from 215.3p to 229.2p. "We reiterate our 'buy' recommendation and 3,800p price target."