Reckitt Earnings: Slew of Bad News Sends Stock Down More Than 10%; Shares Cheap

We are reducing our fair value estimate for wide-moat Reckitt by 3% to GBX 6,700/$17.10 for the ADR following disappointing results for fourth-quarter 2023 and a more negative-than-expected 2024 outlook. Management has guided for like-for-like revenue growth of 2%-4% for 2024. Although this is in line with company-compiled consensus of 2.9% organic revenue growth, it does have a different composition, with the nutrition segment expected to post a high-single-digit revenue decline and mid-single-digit growth for the other two segments, health and hygiene. This would require the health and hygiene segments to post higher-than-expected growth to compensate for the nutrition downside. This scenario is harder to fathom at this time given relatively weak volume momentum going into 2024 and lower pricing in the context of moderating input cost inflation.