Reckitt Benckiser sees modest bounce following $7.1 billion market-cap wipeout

By Steve Goldstein

Reckitt Benckiser saw modest gains on Monday, following the share-price slide that erased some GBP5.6 billion ($7.1 billion) of market value.

Reckitt Benckiser shares (UK:RKT) rose 1.4% in afternoon trade, after a decline of nearly 15% on Friday, when an Illinois jury ordered its Mead Johnson unit to pay $60 million in compensation for the death of a premature baby who was fed Enfamil. Reckitt said it will appeal the decision.

Related: Here's what families need to know after a landmark $60 million verdict in baby-formula suit

There are more than 400 lawsuits against Mead Johnson and Abbott pending in federal court in Chicago, according to Reuters. Analysts at Barclays said that number may grow, but plaintiff numbers would not likely exceed "a few thousand plaintiffs settling in the high hundreds of thousands of dollars a case."

Analysts at RBC Capital Markets led by James Edwardes Jones said a call with company executives was reassuring.

"Reckitt believes there were errors in the trial and that there is no evidence to support a causal relationship between its products and [necrotizing enterocolitis]. Indeed it is the case that breast milk offers the lowest incidence rates of NEC in pre-term infants, but when it (and donor breast milk) is unavailable, infant milk products are the next best thing," they said.

Analysts at Deutsche Bank said the maximum liability would be between GBP1.5 billion and GBP3.3 billion.

-Steve Goldstein

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03-18-24 1053ET

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