Reckitt Benckiser rallies on JPMorgan upgrade

3rd Sep 2015 11:56

(ShareCast News) - JPMorgan Cazenove upgraded Reckitt Benckiser to 'overweight' from 'neutral' and raised its price target to 6,300p from 6,025p.The bank said accelerating margin and sector-best top-line growth mean it expects the company to deliver the sector's strongest organic earnings before interest and tax in the full-year 2015-2016.It said that at 22x 2016 price-to-earnings, Reckitt shares do not come cheap, but they trade only marginally above peers despite stronger earnings per share growth and optionality for higher cash returns. It also highlighted the fact management is still on the lookout for M&A.JPM said Reckitt has entered a new phase of margin acceleration, driven by project Supercharge and by a better performance from its premium portfolio driving higher gross margin.The bank expects the pace of expansion to remain high in 2015, widening the performance gap with the rest of the European health and personal care sector.At 1200 BST, Reckitt Benckiser shares were up 3% at 5,847p.