Broker snap: Reckitt's a 'buy' after third-quarter beat, says Galvan

29th Oct 2012 11:53

Galvan Research has labelled consumer goods giant Reckitt Benckiser as a 'buy' after the company surpassed expectations in the third quarter."Time and time again the excitement hungry City has downplayed the fundamentals at Reckitt's, only to be surprised when the group goes on to beat expectations," said Galvan's head of research Andrew Gibson."On this basis alone, and backed by the reiteration of FY 2012 guidance, Reckitt shares are rated a 'buy' at Galvan Research, a view also supported on a technical level with a charting breakout towards 3,900p."The The Cillit Bang, Vanish and Nurofen manufacturer reported some strong third-quarter results last Wednesday which were "underpinned by an excellent performance in emerged markets and an improved performance in Europe North America." Net revenue in the three-month period was down 1% at £2,422m, but up 4% at constant exchange rates. For the full-year, the company said it still expects like-for-like net revenue growth of 200 basis points above the market growth rate. "We now expect market growth to be at the top end of the 1-2% range," said Chief Executive Rakesh Kapoor.Gibson said: "The daily chart shows that Reckitt shares have been in a rising trend channel since this time last year, with the floor of the channel currently running through 3,600p. "While there is no end of day close back below the late 2011 uptrend line, we expect 3,900p to be hit at the turn of the year."Shares were trading down 0.67% at 3,725p in morning trade on Monday, though are still up over 1.5% over the last week.BC