Jefferies says drug flotation plan takes shine off Reckitt Benckiser results

28th Jul 2014 10:11

Uncertainty surrounding a decision by Reckitt Benckiser to de-merge its drug arm has taken the shine off strong first-half results from the household goods group, broker Jefferies said.Reckitt, whose products include Cillit Bang, Nurofen and Strepsils, on Monday said first half net revenue at constant exchange rates rose 3% to £2.3bn on a similar rise in underlying operating profit to £1.08bn.The group also said it was planning to pursue a de-merger of RB Pharmaceuticals with a separate UK listing.Jefferies said the company's earnings and margins were better than expected and the group's performance in Europe and its outlook were positive.But it said the group's failure to match speculation by coming up with more concrete plans for the drug business, such as selling it, was disappointing."This feels like an anti-climax to us," Jefferies said, keeping its 'hold' recommendation and 5000p price target on the stock.Hargreaves Lansdown also said the market viewed the stock as a firm 'hold'."Given reducing revenues and growth uncertainties for the pharma business, a trade buyer looks to have remained elusive, with a stock market listing the natural, if potentially more fraught, alternative," Hargreaves said.Shares rose 130p or 2.6% to 5200p at 11:09 in London.PW