Morgan Stanley lifts Haleon stock rating, raises target to $11.25

On Friday, Morgan Stanley (NYSE:MS) upgraded shares of Haleon Plc (NYSE:HLN) from Equalweight to Overweight, adjusting the price target to $11.25, up from the previous $10.65. The upgrade reflects the firm’s positive view of Haleon’s performance in the context of a challenging economic environment. The stock, currently trading at $10.57, sits near its 52-week high of $10.85, with impressive year-to-date returns of 12%. InvestingPro data reveals the company commands a substantial market capitalization of $47.57 billion.

Analysts at Morgan Stanley have identified Haleon as a compelling consumer story due to its resilience in uncertain times. They expect the company to continue outperforming its peers, driven by its robust product categories, consistent market share gains, and a well-articulated cost-saving program. This resilience is reflected in the company’s strong fundamentals, including a healthy gross profit margin of 63.23% and notably low price volatility with a beta of 0.21.

The firm’s confidence in Haleon is bolstered by the company’s strong top-line guidance, which is supported by market analysis indicating sustained outperformance. The recent Capital Markets Day (CMD) highlighted significant opportunities for Haleon, including an ambitious £800 million cost-saving initiative. The specifics of this program, particularly its implementation over the next three to four years, were a key factor in the upgrade. For deeper insights into Haleon’s financial health and growth potential, InvestingPro subscribers can access additional ProTips and comprehensive analysis in the Pro Research Report.

Morgan Stanley has also revised its earnings per share (EPS) estimates for Haleon, increasing them by 6% for the year 2027. This adjustment takes into account the potential for Haleon to reach the higher end of its performance range, which could lead to further upside.

The upgrade from Morgan Stanley underscores a positive outlook for Haleon as it navigates through current market uncertainties. The firm’s analysts have expressed confidence in the company’s ability to maintain its growth trajectory and deliver value to shareholders.

In other recent news, Haleon plc has made significant strides in its financial and strategic operations. The company reported an upgrade from Moody’s to an A3 rating with a stable outlook, reflecting its strong business profile and solid cash generation. This comes after Haleon announced a 5% organic revenue growth in 2024, with a company-adjusted operating profit increase of 9.8% at constant currencies. Additionally, Haleon has taken full control of its joint venture in China by acquiring the remaining 12% stake in Tianjin TSKF Pharmaceutical (TADAWUL:2070) Co., Ltd. for approximately £0.2 billion, marking a strategic expansion in the Chinese market.

In another development, Haleon updated its Euro Medium Term Note (EMTN) Programme, which plays a crucial role in its capital structure by allowing the issuance of debt securities. The company also disclosed its share capital and voting rights, reporting a total of over 9 billion ordinary shares, with a significant portion carrying voting rights. Furthermore, Haleon executives, including the General Counsel and Chief Marketing Officer, participated in the company’s Share Reward Plan, acquiring shares to align their interests with shareholders.

These recent updates underscore Haleon’s ongoing efforts to maintain transparency and strategic growth.

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