Broker tips: Reckitt Benckiser, Liontrust Asset Management

(Sharecast News) - RBC Capital Markets downgraded Reckitt Benckiser on Wednesday to 'sector perform' from 'outperform' and cut its price target on the stock to 6,200p from 6,400p as it updated forecasts to factor in the Essential Home sale. "We don't know everything we would like to, but nonetheless are incorporating into our forecasts the disposal of Essential Home along with the anticipated special dividend (payable in late Feb) and share consolidation (which are designed to offset one-another)," the bank said. "We derive a target price of £62 using an adjusted present value calculation. Consequently, we reduce our rating to sector perform from outperform."

RBC said its new forecasts for Reckitt were "not the finished article" and pointed out, for example, that Reckitt has not indicated what, if any, margin growth it expects in 2026 following the disposal of Essential Home and associated stranded costs.

"Meanwhile, neither the share consolidation (24:25 to take effect from 2 February) and £1.6bn special dividend (payable on 20 February, or 27 February for ADR holders) has yet happened," it said. "Nonetheless, given our view of the overwhelming likelihood that they will, we update our forecasts accordingly."

As far as the NEC baby formula litigation was concerned, RBC said it continues to assume an £2bn all-in global settlement, which it believes was close to buy-side expectations based on its conversation with investors.

"The outcome of the first multidistrict litigation (MDL) bellwether case against Mead Johnson, scheduled in February, should allow us to assess its negotiating position better," the bank said.

Analysts at Berenberg lowered their target price on Liontrust Asset Management from 320p to 260p on Wednesday, even as net outflows reduced in its third quarter.

Liontrust released its Q3 assets under management and advice update on Wednesday and, in the update, reported that net outflows had reduced versus both Q325 and Q226, despite elevated outflows in October due to budget uncertainty.

Looking at Liontrust's net outflows by month, Berenberg said the trajectory of its underlying outflows "appears to be improving" and, while performance at larger funds was "still challenging", added that performance across the wider fund range "also seems to be turning a corner".

The German bank, which reiterated its 'hold' rating on the stock, noted that there was no progress update on Liontrust's new mandate pipeline in the statement, but stated the new mandate wins in Q3 gave it confidence that further mandates can be converted during 2026.