Broker tips: Reckitt Benckiser, DCC, Standard Chartered

Analysts at Deutsche Bank upped their target price on consumer goods company Reckitt Benckiser from 7,400.0p to 8,400.0p on Monday, highlighting the group's "enduring fame".

Deutsche said the Covid-19 pandemic had led to "significant growth" in some of Reckitt Benckiser's categories and stated it would also likely rejuvenate growth in others.

The German bank stated that higher near-term demand enabled the company to invest more to support its long-term objectives and increased the likelihood of success.

Deutsche said its new numbers indicated a further 9% upside and 11% total shareholder return despite the group trading on a premium to the Staples sector, stating the position was justified by RB's enhanced growth outlook and turnaround plan.

"Given likely persistent low interest rates, we feel that investors should not be afraid of good quality expensive stocks."

RBC Capital Markets downgraded its stance on sales, marketing and support services group DCC to ‘sector perform’ from ‘outperform’ on Monday, saying the shares were up with events.

The bank, which lifted its price target on the stock to 7,400p from 6,000p, said it remains a fan of the shares, particularly "the strong operational management and returns focus". However, it now sees upside as more limited, with the stock trading in line with other quality distributors and seemingly factoring in acquisition spend of £300m a year.

RBC said it "would wait for a better entry point".

In an update last Friday, DCC said trading in the first quarter was resilient and ahead of its expectations at the time of the last update, but behind the prior year due to the severe lockdown restrictions in place during April and May.

Analysts at Jefferies reiterated their 'buy' recommendation for shares of Standard Chartered, telling clients that the consensus was likely underestimating the lender's performance in the financial markets segment during the second quarter.

On 17 July, StanChart published a compilation of the consensus for analysts' estimates which, for the second quarter, left Jefferies expecting a 42% beat on pre-tax profits and $237m more of income.

Jefferies said that even its own estimate for Financial Markets revenue of $834m, for a 12% increase on the year, was "conservative" given how peers in the US had performed.

The broker also believed that their peers had missed the fact that one-month HIBOR averaged 100 basis points over the three months to June, remaining "meaningfully higher" than LIBOR, and against the current spot of 30 basis points.

As long as guidance from the lender on the potential headwinds from interest rates for the full-year stayed within $600-800m, that would be "uncontroversial", Jefferies said.

On operating costs, any figure above $2.6bn would be seen as a negative while anything below $2.4bn would be positive, the analysts added.