Sharecast - Reckitt announced its third-quarter sales on Wednesday, with group like-for-like sales growth of 3.4%, which was a touch below visible alpha consensus forecasts of 3.7%.
Berenberg said the miss was driven by Reckitt's nutrition division, where like-for-like sales declined by 11.9%, which more than offset stronger-than-expected like-for-like sales growth in the hygiene division, which grew by 8.1%.
The German bank said that since it reinstated coverage on Reckitt (LON:RKT) with a 'buy' rating in 2019, the stock was down by 6%, a "disappointing performance" despite the "impressive turnaround" in the company's performance in the last three years.
"Our investment thesis was based on an improvement in operating performance underpinning a stock re-rating, and this has not materialised," said Berenberg, which also lowered its target price on the stock from 7,170.0p to 6,400.0p.
Looking ahead, the analysts said a catalyst was "less clear" as LFL sales growth could remain in the 3-5% range in 2024, as pricing moderates and group volume growth remains negative.
"For 2023, we forecast LFL sales growth of 4.4% (previously 5.0%) and an adjusted EBIT margin of 23.4% (unchanged). Our 2023 EPS forecast is broadly unchanged; however, for 2024E our EPS is 1% lower as we reflect some of the potential headwinds."
Reporting by Iain Gilbert at Sharecast.com