Haleon (LON: HLN) shares rose around 0.8% on Thursday despite Morgan Stanley lowering its price target for the stock from 415p to 410p, maintaining an Overweight rating.
The investment bank updated its forecast ahead of the company's upcoming third-quarter earnings results, which are due on October 31.
Analyst Rashad Kawan noted that the firm expects “more challenging vitamins, minerals, and supplements comps in the US in particular” due to the strong performance following the launch of Centrum Silver.
As a result, Morgan Stanley has lowered its forecast for Haleon's third-quarter organic growth to +6.3% from +7.5%, although its FY24 organic growth estimates are unchanged at +5% compared to the consensus estimate of +4.9%).
Despite the revised third-quarter outlook, Kawan remains optimistic about Haleon's long-term prospects.
Morgan Stanley continues to forecast full-year 2024 organic earnings before interest and tax (EBIT) growth of +9%. However, the firm has slightly lowered its margin expectations to 22.6% from 22.9%, reflecting the impact of the recently closed sale of the NRT business and foreign exchange movements.
Overall, Morgan Stanley's price target reduction for Haleon is primarily driven by the more challenging VMS comparables in the United States.
On Tuesday, analysts at Deutsche Bank took the opposite approach, raising the price target on Haleon to 375p from 340p, keeping a Hold rating on the shares.
So far this year, Haleon shares are up 18.8%.
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