Broker snap: Panmure pleased with Reckitt's developed market growth

25th Oct 2012 11:09

Panmure Gordon has raised its target price for consumer products group Reckitt Benckiser after strong growth in Europe and North America (ENA) helped like-for-like (LFL) sales beat forecasts in the third quarter.Total reported sales, down 1% at £2,422m, were pretty much in line with consensus, however LFL growth of 5% came in above the 4% estimate. A robust result from ENA - the region delivered its first growth since the fourth quarter of the year before - returned to growth, though the group still experienced a modest slowdown in Russia, Middle East and Africa (RUMEA) and Food experienced an "evaporation of growth", Panmure said.The broker said: "The ENA performance is encouraging, but we would caution against getting too carried away by one quarter of 2% growth, particularly as it was helped by a significant increase in brand investment and a good start to the cold/flu season. Our 2012E earnings per share forecast of 248.7p remains unchanged, and only represents 0.6% growth on 2011A."Reckitt only reiterated its full-year outlook, and as such we believe the initial 6% jump in the share price was a slight over-reaction. Nevertheless, we nudge our price target up by 3% from 3540p to 3650p and reiterate our 'hold' recommendation."Shares were down 0.66% at 3,743p in mid-morning trade on Thursday, pulling back of the decent bounce the day before.BC