- Price
- $13.32 → $13.30(−0.2%)
- Discount
- 28.4% → 28.5%(+0.1 pts)
- Thesis
- Reckitt Benckiser trades at a discount because investors worry about two issues. First, Mead Johnson: Reckitt has tried for two years to sell its infant-formula unit. Lawsuits over necrotizing enterocolitis (NEC), a serious bowel disease in premature babies linked to Enfamil formula, keep complicating a sale. Second, the Essential Home divestment made adjusted earnings per share fall sharply in H1 2026, simply because the profit that business used to contribute is gone. Core Reckitt's like-for-like growth means sales growth after removing the effect of currency swings and business changes. For the discount to close, that growth needs to keep accelerating past the 4.2% pace it reached in Q2 2026. That would match the 4%-5% full-year guidance management has held. A sale of Mead Johnson, even at a price much lower than what Reckitt paid in 2017, would remove a major distraction. It would let the market value the simpler remaining business on its own. Mead Johnson also won its first federal bellwether NEC trial in August 2026, which removed one source of legal uncertainty. Hundreds of NEC lawsuits are still pending, though, and an earlier $60 million verdict was sent back for retrial rather than dismissed. The next scheduled test is athe Q3 trading update expected around lateon October 202627, which2026. It should give a fresh read on Core Reckitt growth. On November 19, 2026, Reckitt holds an investor event about its North America business. Further news on the Mead Johnson sale could arrive at any point, given how long that process has already run. If growth keeps compounding and Mead Johnson is fully sold, the discount could close within the next year. The main risk is that a large adverse NEC verdict, or a stalled sale process, could keep tying up capital and management attention well beyond 2026.
- Checkpoints
- Oct 27, 2026: Q3 2026 trading update: Core Reckitt growth. Pending. Watch: Core Reckitt like-for-like growth at or above the 4.2% of Q2, in line with 4% to 5% for the year, passes; growth back below 3% or a guidance cut fails.
Nov 19, 2026: Investor event: Reckitt Focus On North America. Pending. Watch: A clear plan for North America growth that supports 4% to 5% Core Reckitt growth passes; a weaker North America outlook fails.
Mar 2027 (estimate): Full-year 2026 results: leverage and Mead Johnson. Pending. Watch: Net debt falling below 2.5 times adjusted EBITDA and progress on a Mead Johnson sale pass; higher leverage or no sale path fails.