Broker snap: Solid results from Reckitt, says Nomura

8th Feb 2012 10:08

Cillit Bang maker Reckitt Benckiser reported better-than-expected headline earnings per share (EPS) and good top-line growth momentum in its full-year results today, according to Nomura which reiterated its buy recommendation on the consumer products giant.Fourth quarter EPS came in at 74.2p, 2% above Nomura's 72.5p forecast (4% ahead of consensus estimates of 71.25p), while organic sales growth of 5% beat Nomura's expectations of a 3.9% increase (consensus: +3.6%)."The company is guiding for 3-4% organic sales growth for the base business in 2012 and flat operating margin, despite higher investments," Nomura notes. Nevertheless, the broker is forecasting 4.3% organic sales growth a 50 basis point margin expansion for the base business (ahead of consensus) and 1% increase in net income at constant exchange rates.Nomura says that, on its estimates, Reckitt's stock is trading at 13.8 times 2012 earnings, compared with sector rivals Procter & Gamble and Colgate which trade on an average price-to-earnings multiple of 15.6 (on consensus numbers).Nomura maintained its positive view and 3,900p target price.Reckitt was the top performer on the FTSE 100 on Wednesday morning, trading 3.3% higher at 3,492p.BC