Haleon figures meet expectations; but analysts and investors wanted more
Last updated: 09:45 27 Feb 2025 EST, First published: 09:38 27 Feb 2025 EST
Haleon PLC's (LSE:HLN, NYSE:HLN) prelims have reassured investors, with earnings per share (EPS) beating expectations by 6% in the second half of 2024, according to analysts - although the shares succumbed to a bout of profit taking in their wake.
The consumer health giant reported 5% organic growth for the year, slightly ahead of market forecasts, Stifel said.
Fourth-quarter growth of 6.8% was also stronger than expected, showing a solid end to the year.
The company’s adjusted operating profit hit £2.5 billion, with an operating margin of 22.3%. This was in line with both Stifel’s and the market’s estimates. EPS came in at 17.9p, which Barclays saw as a notable beat, though Stifel noted it was only slightly ahead of consensus.
Guidance for 2025 remains at 4-6% organic growth, but Barclays flagged concerns over the weighting towards the second half of the year.
This is due to cold and flu destocking in early 2025, which could limit first-quarter organic growth to 3-4%. Barclays said it would look for more clarity on this during Haleon’s investor call.
A £500 million share buyback was also announced, a move that could help support the stock.
However, Stifel reiterated its 'hold' rating, saying Haleon needs to demonstrate stronger growth at the top end of guidance to justify a higher valuation.
Barclays noted that 71% of Haleon’s business is now gaining or holding market share, up from 69% at the half-year stage.
The Europe, Middle East, and Latin America division outperformed, driven by strong pain relief sales in southern Europe and North Africa.
The Asia-Pacific region was also slightly better than expected, despite recent negative signals from competitor Kenvue.
While the results were solid, Barclays expects some profit-taking after the recent share price rally.
Stifel also sees limited upside unless Haleon can deliver stronger growth.
The shares reflected the cautious commentary following the results, falling 3.6% to 381.4p.
