Reckitt's Muted Performance in 2023 Will Likely Be the Price Paid for a Stellar 2022

Wide-moat Reckitt reported stronger-than-expected full-year 2022 results, with net revenue of almost GBP 14.5 billion and an adjusted operating margin of 23.8% (compared with GBP 14.3 billion and 23.3% in our forecast, respectively). We reconfirm our GBX 6,700 fair value estimate, as this slight overdelivery—mainly driven by an acceleration of pricing actions in the fourth quarter—has a limited impact on our valuation and our largely unchanged long-term forecast. Our U.S. dollar share class declines to $16.20 from $16.80 on a weaker British pound. At current levels, the stock is slightly undervalued, amid the uncertainty around the absence of a permanent CEO.