BofA Securities has adjusted its outlook on Haleon PLC (LON:HLN: LN) (NYSE: HLN), increasing the price target from £4.00 to £4.40 while maintaining a Buy rating on the stock.
The revision reflects a positive view of the company's growth prospects and market position.
The firm's analysis suggests that Haleon is well-positioned to achieve a compound annual growth rate (CAGR) of 5.3% from 2023 to 2026. This is attributed to the company's leading exposure and market share gains in structurally resilient categories.
The analyst emphasized Haleon's below-sector pricing risk and its potential for organic growth.
BofA Securities also forecasts that Haleon will maintain above-sector margins, projecting a margin of 23% by 2026 despite any disposals.
The firm anticipates strong cash conversion and rapid deleveraging from the company, which is expected to result in a robust earnings per share (EPS) CAGR of approximately 7.6%.
The report further highlights supportive catalysts for Haleon's performance. The consumer health sector is seen as one of the most resilient staple categories, benefiting from secular growth trends such as premiumization, an aging population, and an expanding middle class in emerging markets.
Additionally, the sector faces lower pricing risks compared to other staple categories due to higher barriers to entry, the importance of efficacy, premium for trusted brands, and low private label penetration.
Haleon recently announced the appointment of two new board members, Alan Stewart and Nancy Avila, who bring extensive experience in corporate finance, business transformation, and digital strategy.
Haleon has launched Eroxon®, the first FDA-cleared over-the-counter gel for the treatment of erectile dysfunction in the United States, marking a significant development in the sexual health market. The company also disclosed its total number of shares with voting rights, standing at 9,123,638,944, each with a nominal value of £0.01.
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