This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Trade Parameters
Technical Observations – For
Technical Observations – Against
The current share price breakout opens the door for a return to Jan highs. Defensive/non-cyclical shares like Consumer Staples (non-discretionary) can fare well during periods of market uncertainty/weakness, such as like we are experiencing with the threat of a trade war. Shares up strongly since Q1 Sales report in late April.
Risks to the shares include an equity rally that favours risk assets rather than consumer staples. A low 2.6% dividend yield is at risk of becoming less attractive than safer bonds and features in the lower half of the UK 100 in terms of income. The US FDA recently warned about unsafe teething products, including Reckitt’s Cepacol.
Consensus is Bullish (46% of brokers say Buy; only 8% say Sell) while 65% of brokers suggest upside from current levels. This offers potential for the share price breakout to attract the attention of the 46% Neutrals, encouraging them to upgrade their ratings and targets. The average broker target of all June broker updates is 6720p, which is below our objective of revisiting Jan highs, but we note 45% brokers suggesting >7000p.
Next Event: First half results, 27 July; Ex-div, mid-Aug
Latest Broker 12-Month Consensus: 46% Buy, 46% Hold, 8% Sell (full breakdown on request)
Source: DowJones Newswires, Reuters News, Bloomberg or Company Press releases
| Share | 1wk | 1m | 3m | 6m | 1yr | 2yr | 3yr | 4yr | 5yr |
| Perf % | 2.9 | 10.1 | 6.1 | -5.7 | -18.2 | -15.7 | 15.1 | 23.5 | 35.2 |
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Prepared by Michael van Dulken, Head of Research