Reckitt’s Pricing Power Proves Unwavering in the Face of Rampant Cost Inflation; Shares Attractive

Wide-moat Reckitt’s third quarter trading update delivered few surprises, with the strong topline growth momentum continuing amidst hefty pricing actions, and management broadly reaffirming the full-year revenue growth and profit guidance. We believe the share price reaction to the print, to the tune of a 4% decline on the day—which we expect is the result of the relative volume weakness in the quarter—was slightly overblown, as we surmise the results still point to unwavering pricing power and overall low price elasticity. Therefore, we believe the current market value is an attractive entry point and we reiterate our GBX 6,700 fair value estimate. Our U.S. dollar share class declines to $15.40 from $16.20 on a weaker pound.