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On Tuesday, BNP Paribas (OTC:BNPQY) Exane initiated coverage on Haleon Plc (NYSE:HLN), a $50.3 billion consumer healthcare company, with an Outperform rating and a price target of $13.40. The firm’s analysis highlighted Haleon’s strong gross margin (GM) of 63.2%, which stands as the highest among its peers. According to InvestingPro data, the company maintains excellent financial health with an overall score of "GREAT," supported by strong profitability metrics. Despite this, there are indications that Haleon could improve its efficiency metrics, such as sales and gross profit per employee and per plant. With current annual revenue of $14.1 billion, BNP Paribas Exane sees potential for Haleon to streamline operations inherited from three separate pharmaceutical supply chains. The company’s low beta of 0.21 suggests it could pursue operational improvements while maintaining relatively stable stock performance.
The firm suggests that Haleon could achieve cost savings by reducing the number of formulations and stock-keeping units (SKUs) as well as cutting back on contract manufacturing, which currently accounts for about 30% of the company’s packaging. BNP Paribas Exane anticipates a gross margin growth of approximately 50 basis points in FY26e and around 60 basis points per annum thereafter.
BNP Paribas Exane also notes that Haleon is expected to incur one-time restructuring and asset write-off costs amounting to roughly GBP 300 million. Although these costs are not considered material, they do represent about 3% of the company’s sales. The analyst’s remarks underscore the belief that there is room for operational improvement that could enhance Haleon’s financial performance in the coming years.
The initiation of coverage and the setting of the price target are based on the firm’s benchmarking and analysis of Haleon’s current position within the market. BNP Paribas Exane’s assessment points to the company’s potential to capitalize on its high gross margin by implementing efficiency improvements across its operations. Trading near its 52-week high, Haleon shows promising value metrics according to InvestingPro, which identifies multiple positive factors including low price volatility and attractive growth potential. Subscribers can access the comprehensive Pro Research Report for detailed analysis of Haleon’s market position and growth prospects.
In other recent news, Haleon plc has reported several executive and director share transactions. Bláthnaid Bergin, an Independent (LON:IOG) Non-Executive Director, acquired 6,145 ordinary shares at £4.0427 per share, while Marie-Anne Aymerich, another Independent Non-Executive Director, purchased 21,300 shares at £4.051 each. Additionally, General Counsel Adrian Morris and Chief Marketing Officer Tamara Rogers participated in the company’s Share Reward Plan, acquiring 62 shares each, including matching shares awarded at no cost. These transactions align with the UK Market Abuse Regulation, emphasizing transparency in executive dealings.
Moreover, Morgan Stanley (NYSE:MS) has upgraded Haleon’s stock rating from Equalweight to Overweight, raising the price target to $11.25. This upgrade reflects confidence in Haleon’s ability to outperform its peers, supported by resilient product categories and a robust cost-saving program. The firm’s analysts have increased earnings per share estimates for 2027 by 6%, acknowledging potential upside if Haleon achieves the higher end of its guidance range. These developments underscore Haleon’s strategic focus on maintaining growth and delivering shareholder value amidst an uncertain economic environment.
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