On Friday, Morgan Stanley (NYSE:MS) updated its outlook on Haleon PLC (LON:HLN:LN) (NYSE: HLN), raising the price target to GBP4.15 from the previous GBP3.85, while retaining an Overweight rating on the stock.
The firm anticipates Haleon to continue outperforming its European Staples peers over the next twelve months, driven by strong market share trends and a favorable comparison in the second half of the year.
The analyst from Morgan Stanley predicts that Haleon will experience an acceleration in volume and growth, with an expected organic growth of +6.5% in the second half of the year compared to +3.5% in the first half. This growth is supported by easier comparators and is anticipated to contribute to the company's continued outperformance in its sector.
Despite the positive outlook, Morgan Stanley has removed Haleon from its Top Pick list, citing the stock's more than 15% year-to-date re-rating, which now values the company at approximately 20.5 times its calendar year 2025 price-to-earnings ratio. This valuation represents a roughly 20% premium over other European Staples companies.
However, the firm maintains its Overweight rating, justified by Haleon's strong visibility on top-line growth in a resilient category and a clear path to consistent high-single-digit percentage earnings per share growth over the next three years, placing it in the top quartile of European Staples.
The analyst highlighted Haleon's consistent performance, which is expected to help the company continue to outperform its Home and Personal Care (HPC) and Food peers, especially given the ongoing consumer weakness in key markets such as the United States and China. Morgan Stanley's update includes a model reflecting these views and projections for Haleon's future performance.
In other recent news, Haleon plc has announced a dual-tranche bond offering as part of its Euro Medium Term Note (EMTN) program. The offering encompasses €750 million of fixed-rate notes due in 2028 and £300 million of fixed-rate notes maturing in 2033. Haleon intends to use the proceeds for general corporate purposes, including the partial repayment of a $1.75 billion bond set to mature in March 2025.
On the analyst front, BofA Securities has maintained a Buy rating for Haleon, increasing the price target from £4.00 to £4.40. The firm's analysis suggests Haleon's potential for a compound annual growth rate of 5.3% from 2023 to 2026 and an earnings per share growth of approximately 7.6%. Goldman Sachs (NYSE:GS), however, downgraded Haleon's stock from "Buy" to "Neutral," while Berenberg initiated coverage with a "Buy" rating.
Haleon has also made significant strides in product development, launching Eroxon®, the first FDA-cleared over-the-counter gel for the treatment of erectile dysfunction in the United States, expected to be available at major retailers in October 2024.
In terms of corporate structure, Haleon has welcomed two new board members, Alan Stewart and Nancy Avila, and revealed its total number of shares with voting rights to be 9,123,638,944. These developments highlight a dynamic period for Haleon.
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