MARKET REPORT: Reckitt shares tumble as bearish brokers bite

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MARKET REPORT: Reckitt Benckiser shares tumble 4% as brokers cast doubts over upcoming third-quarter results

 Amid a sluggish start to the week for markets, analysts’ views were responsible for some of the Footsie’s sharpest share price moves.

Morgan Stanley and JP Morgan both took aim at household goods giant Reckitt Benckiser, which makes everything from Dettol and Durex to Strepsils and Vanish.

Both brokerages were sceptical about its upcoming third-quarter results – scheduled for release on October 22 – which JP Morgan expects to be ‘weak’.

And they also expect its annual sales growth to be towards the lower end of the 2 per cent-3 per cent range that Reckitt set over the summer.

Analysts at Morgan Stanley and JP Morgan have taken aim at household goods giant Reckitt Benckiser, which makes everything from Dettol and Durex to Strepsils and Vanish

Reckitt recently poached Laxman Narasimhan, a former Pepsico executive, as its new boss, and the firm could change its strategy under his direction.

But analysts’ bearish stance sent shares 4 per cent lower, down 262p, to 6344p by the close, making Reckitt the biggest faller in the FTSE 100.

Barclays brokers downgraded Premier Inn-owner Whitbread from ‘overweight’ to ‘equalweight’ and trimmed its price target on the stock from 4700p to 4350p. The bank is glass-half-empty ahead of Whitbread’s first-half results, which will be published nine days before the Brexit deadline of October 31.

They point to caution around the falling profits per room that hotels are making and Premier Inn’s ‘increased underperformance’.

Analysts say they would like to ask management whether this is due to losing share to budget rival Travelodge. But on the upside, they say there is the possibility that Whitbread could be a take-over target – a move which would make it the latest in a line of firms that have been snapped up by overseas buyers this year. 

Stock Watch – Motif Bio

Pharmaceuticals minnow Motif Bio plunged 61 per cent, or 1.32p, to 0.85p, after it outlined restructuring plans that would include selling its main asset, a trial-stage antibiotic called iclaprim.

It has been in talks with the US medicine regulator to find out what it would need to do to get iclaprim off the ground. 

This would be a years-long, in-depth clinical trial costing tens of millions of dollars.

Motif said the best step forward would be for a different company to take this on.

Whitbread fell 3.9 per cent, or 173p, to 4294p. Meanwhile, mid-cap home repairs insurer Homeserve rose 1.8 per cent, or 21p, to 1186p after RBC Capital Markets upgraded it from ‘sector perform’ to ‘outperform’ and pumped up its target price from 800p to 1500p as it was dubbed ‘one of the best defensive growth stocks in the sector’.

Despite a backdrop of simmering US-China trade tensions and worries about Brexit, it was a subdued trading day in the City.

The FTSE 100 ended the day a shade down, falling 0.24 per cent, or 18 points, to 7408.21, while the FTSE 250 closed 0.17pc lower, down 34.28 points, to 19936.67.

Among miners, Sirius Minerals rocketed, climbing 37 per cent, or 1.08p, to 3.98p as optimistic bargain hunters began snapping up shares.

Its shares are still down 81 per cent this year after a series of disappointments for investors, which was capped off in September when it was forced to abandon a financing round.

Blue-chip group Rio Tinto fell 1 per cent, or 40.5p, to 4209p following reports it has cancelled plans to sell or float its Canadian iron ore business, Iron Ore Co. of Canada.

And Ukrainian iron ore miner, Ferrexpo, was in the red after it used a stock market update to shoot down claims made by a local prosecutor on social media against its chief executive and largest shareholder Kostyantin Zhevago.

Ferrexpo denied allegations that Zhevago is being investigated in relation to a business he owned in Ukraine until 2015. Shares shed 0.8 per cent, or 1.3p, to close at 161.15p.

BP shares edged down 0.7 per cent, or 3.5p, to 515.8p in the first trading day after it was revealed chief executive Bob Dudley, who has been at the company’s helm since 2010, is planning to step down.

On AIM, podcast maker Audioboom lost ground after announcing the abrupt departure of its chief executive Rob Proctor.

No reason was given for his exit. Operations chief Stuart Last is stepping up while a search gets under way for a replacement.

Shares in Audioboom fell 2.8 per cent, or 5p, to 172.5p.

 

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