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On Wednesday, HSBC analyst Jeremy Fialko downgraded Haleon PLC (HLN:LN) (NYSE: HLN) stock rating from Buy to Hold, while maintaining a price target of GBP4.20. The adjustment comes after a significant rise in the company’s share value over the past year. According to InvestingPro data, Haleon’s stock has delivered an impressive 30.38% return over the past year, trading near its 52-week high of $10.80. Fialko pointed out that Haleon’s shares have increased by approximately 25%, which has inflated the forward price-to-earnings (PE) ratio from under 17x to the current 24.36x.
Fialko expressed continued appreciation for Haleon’s business fundamentals and the potential of its product portfolio to drive superior growth. InvestingPro analysis supports this view, highlighting the company’s robust financial health with a "GOOD" overall score and strong profit metrics. However, he noted that the current valuation already reflects these positive attributes, with the stock trading at a roughly 25% premium compared to European Staples. InvestingPro’s Fair Value model suggests the stock is slightly overvalued at current levels.
The analyst also mentioned that while their underlying estimates for the company remain largely unchanged, the full consideration of recent disposals has led to an approximate 4% reduction in earnings per share (EPS) estimates. This revision in EPS, however, has not affected the established target price of 420 pence.
The decision to downgrade Haleon’s stock rating was based on the view that the current share price now offers limited potential for further upside, prompting HSBC to shift its recommendation to Hold from the previous Buy rating. This change reflects the analyst’s position on the stock’s future performance considering the recent price appreciation and the new EPS calculations.
In other recent news, Haleon plc has seen significant developments that may interest investors. The company reported an update on its total share count and voting rights, with 9,083,725,919 ordinary shares issued as of January 31, 2025, and 9,054,145,714 shares carrying voting rights. This information is crucial for shareholders tracking changes in shareholding interests. Additionally, Haleon executives Adrian Morris and Tamara Rogers (NYSE:ROG) acquired shares under the company’s Share Reward Plan, aligning management’s interests with those of shareholders.
Haleon also experienced a board change as Bryan Supran, a Non-Executive Director representing Pfizer Inc. (NYSE:PFE), stepped down following Pfizer’s reduction of its stake in Haleon to below 10%. Analyst updates have also been noteworthy, with Morgan Stanley (NYSE:MS) adjusting its price target for Haleon to $10.05, citing revised margin forecasts due to mergers, acquisitions, and foreign exchange impacts. Meanwhile, Jefferies maintained a Buy rating, with a price target of GBP4.50, expecting 5-6% organic sales growth and highlighting the anticipated U.S. launch of Eroxon as a growth driver. These recent developments reflect ongoing changes and expectations for Haleon’s performance in the market.
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