Cheapest large-cap HPC multiple at top-quartile margins — but Q1 just broke the recovery math.

• Top-tier moat. Reckitt's 60.8% gross margin is tied with Haleon for the highest in the household & personal-products peer set, ahead of P&G (51%), Unilever (45%), and roughly level with Colgate. The Powerbrand portfolio is genuinely monetised at the gross line.
• Bottom-tier multiple. RKT trades at 10.5x adjusted EV/EBITDA versus a peer median of 13.6x — the largest discount in the bench, despite a 20.9% adj. operating margin that beats Unilever, Colgate, Kimberly-Clark, and Kenvue.
• Tape just broke. Q1 2026 LFL printed +0.6% versus +1.5% consensus — three points below management's own 4–5% Core LFL guide. Shares fell 5.6% on the print, the 50/200-day death-crossed on 16 April, and realised vol pushed back into the stressed regime.

Disposal-flattered headline numbers hide a slowing cash engine.

FY2025 IFRS operating profit jumped 74% to $5.7B — but $1.7B was the one-off gain on selling Essential Home to Advent. Strip the disposal out and adjusted operating profit grew just 2%. Cash conversion fell 20 points on a +28% YoY cash-tax bill and rising restructuring spend, while the 4.5% headline yield has been funded by debt and disposals: Reckitt has returned more cash than it generated for two years running.

$21.3B of intangibles — mostly Mead Johnson — explain almost the whole discount.

• Acquired for $17.9B in 2017; written down ~$8.6B since. A $6.6B IFCN impairment in 2019, ~$2.7B in 2021, then three smaller hits through 2025. Goodwill plus intangibles still sit at $21.3B — 63% of total assets — versus $10.5B of equity.
• On the block since July 2024. Twenty-one months of strategic review with no disclosed buyer; Reuters reports Danone has engaged Centerview Partners. Carrying value is roughly $10.8B; UBS publicly models the asset at $5.4–8.9B, 17–50% below the book.
• Litigation tail. Over 775 Enfamil NEC cases consolidated in the N.D. Illinois MDL; first bellwether verdict due 6 July 2026. The November 2024 St Louis defence verdict took worst-case off, but a $200m+ plaintiff award would force settlement reserves and discount any sale further.

Three things consensus has wrong — all pointing the same way.

• MJN exit is a write-down catalyst, not a re-rate. Bull and Stan both add a Haleon-tier multiple to any "defensible" sale. UBS's own published range puts the asset 17–50% below the $10.8B carrying value — a midpoint sale crystallises a $2.7B impairment alongside cash that funds one more special distribution, not a second leg.
• Wrong peer set. Reckitt today is 85% HPC + 15% infant nutrition. Infant nutrition trades at 8–13x. The mix-weighted fair multiple is 11.8–12.6x — not the 13.6x HPC median that bull and bear both anchor to as the rerate ceiling.
• Dividend isn't covered organically. $3.1B returned vs $2.3B FCF in FY25; payout ratio above 100% of clean earnings two years running. Essential Home's $270–400M of FCF is now gone, capex stays at $810M+ for MJN regulatory upgrades through FY27, and the 4.5% yield needs FY26 cash tax to normalise hard.

The next 90 days resolve almost the entire debate.

• 6 July — first NEC MDL bellwether verdict (N.D. Illinois). A defence sweep clears a Danone bid path closer to the $10.8B carrying value; a $200m+ plaintiff verdict anchors settlements in the $2.0–4.0B zone and likely forces a third FY26 MJN/CGU impairment.
• ~24 July — H1 2026 results. After Q1's +0.6% LFL print, management has to either reaffirm the 4–5% Core guide or cut. A clean reaffirmation with positive emerging-markets ex-Russia volume re-engages the bull rerate; a second sub-2% quarter compresses the multiple toward Kimberly-Clark's 12.5x.
• H2 2026 — Mead Johnson disposition. The single largest single-day swing factor in the next 12 months. The FY26 year-end goodwill test (March 2027) is the backstop if no transaction lands — Audit Committee has already flagged MJN's regulatory environment as raising the judgemental nature of cash flows.