Reckitt Benckiser Shares (RKT) Break 5,000 as Morgan Stanley Upgrades

Reckitt Benckiser's shares (LON: RKT) are trading up 2.42% today, as the firm received a significant vote of confidence from Morgan Stanley. In a research note, the firm upgraded the stock to “Overweight” from “Equal Weight” and raised its price target to 5,500 GBp from 4,600 GBp.

Morgan Stanley’s analysts described the company as a “self-help story at a compelling valuation discount.” RKT has added 4.3% through 2025 so far, with perceived upside of another 10% to the latest price target.

Morgan Stanley’s upgrade reflects optimism about Reckitt’s prospects moving forward. The firm anticipates mid-single-digit sales growth and high-single-digit earnings growth starting in 2025. According to the research note, Reckitt’s initiatives to streamline operations and drive profitability position it well for sustained improvement.

The analyst highlighted that the valuation discount creates an attractive entry point for investors, especially as the company transitions into a more stable growth phase.

Why The Underperformance Last Year?

In 2024, Reckitt navigated a challenging yet transformative year. Following a period of earnings volatility in prior years, the consumer goods giant began stabilizing its operations, focusing on efficiency and strategic growth. The second half of the year was considerably better than the first, with a push off 4,000 strongly held.

The company’s portfolio, which spans health, hygiene, and nutrition brands, demonstrated resilience despite inflationary pressures and shifting consumer demand. However, concerns about earnings consistency weighed on the stock, keeping its valuation at a discount compared to peers. Reckitt's shares ended the year down 10%, as the FTSE 100 gained over 5%, but the period of underperformance may be over if recent analyst notes are close to the mark.

Consensus price targets of 5,698p indicate bullish sentiment across the analyst community, with the high mark of 7,200p particularly bullish.

Whilst Reckitt Benckiser has started 2025 on a positive note, further analysis into the turnaround story would be prudent before making any moves. The firm appears on a bullish trend when considering the period from July to today, and momentum is building as it leverages its strong brand portfolio.