Haleon: Analyst Bullish as Underlying Performance ‘Looks Strong’

According to Barclays analysts, Haleon's (LON: HLN) underlying performance looks strong. The bank reacted to the Advil and Sensodyne maker's first-quarter trading statement, released Wednesday. 

Haleon's organic revenue increased by 3% in the quarter, driven by a 5% price growth, but partially offset by a negative contribution of 2% due to weaker cold and flu season and product mix. However, its reported revenue dropped 2.2% to £2.9 billion, with negative impacts of 4.6% from FX and 0.6% from the sale of Lamisil. In addition, Haleon's adjusted operating profit increased 2.3% to £707 million.

Despite the mixed results, Barclays, which maintained an Overweight rating and 400p per share price target on the stock, said the first quarter headline results were impacted by unusually tough comps. However, Haleon's “underlying performance looks strong.”

Furthermore, they believe the company's growth should accelerate from the end of the second quarter as it “has cycled through most of the comp noise.”

Haleon reiterated its full-year 2024 guidance, saying it sees organic revenue growth between 4% and 6%. It also expects positive operating leverage to deliver organic operating profit growth ahead of organic revenue growth.

Barclays now looks for 5.3% organic sales growth for the full year and “continue to think Haleon could be overhang-free by year-end.”

Last week, analysts at HSBC initiated coverage of Haleon with a Buy rating and 370p price target, saying the company possesses the strongest consumer health portfolio and that it is building a track record of superior execution.

The bank said Haleon's “class-leading growth can be sustained.” They added that as market confidence in Haleon's mid-single-digit growth algorithm increases, the shares can re-rate.