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Reckitt Benckiser chairman buys on dip

The pandemic has driven sales in hygiene and health products
Reckitt Benckiser chairman buys on dip
  • Reckitt Benckiser shares have edged downwards following a spate of coronavirus vaccine announcements
  • Chairman Christopher Sinclair and his wife have purchased nearly £250,000 in company shares
IC TIP: Buy at 6,402p

Reckitt Benckiser (RB.) can accurately be considered a beneficiary of this year’s pandemic. In October, the consumer goods giant said that strong demand for the group’s hygiene and health products had pushed its sales up over its first three quarters by 9.4 per cent compared with 2019. Between March and August, Reckitt shares rose by more than a half, peaking at 8,020p at the end of July.

It’s perhaps of little surprise, then, that growing excitement surrounding new coronavirus vaccines has pushed Reckitt's shares down since the start of November. A return to pre-Covid social norms will almost inevitably see a decline in the amount of cleaning products we consume, and Reckitt's shares fell 5.8 per cent following Pfizer’s announcement. They have largely continued on their downward trajectory since. 

This weakness offered a sufficiently enticing entry point for chairman Christopher Sinclair and his wife, Margaret, who together bought £248,603-worth of Reckitt Benckiser's shares at 6,719p apiece.

The so-called winners of this pandemic will soon have to reckon with the unwinding of pandemic-linked share price gains. There are more strings to Reckitt’s bow than supporting frantic hand washing, however, and we don't think the recent softening of the share price is fully merited. The company noted last month that the unwinding of social restrictions in China and India had prompted a surge in condom sales, while trials of a new condom in China are progressing well. These products have supported growth in the company’s health division and will help Reckitt forge ahead in key developing markets. Buy at 6,402p.

Last IC View: Buy, 7,384p, 20 Oct 2020

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Reckitt BenckiserChristopher Sinclair (ch)20 Nov 206,719248,603
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