Haleon Shares (HLN) Gain: Analyst Raises PT on U.S Recovery Expectations

Haleon shares (LON:HLN) are 2.3% higher today, attracting renewed interest following an upgrade from Goldman Sachs and an increasingly optimistic outlook for the consumer healthcare giant. The upgrade suggests a potential inflection point for the company's fundamentals, making its current valuation an attractive entry for markets.

The Goldman Sachs upgrade, moving Haleon from ‘Neutral' to ‘Buy' with a price target of 440 GBp, centers on expectations of stronger volume growth, a recovery in the U.S. market, and continued strength in the Oral Health segment. This positive assessment aligns with Haleon's own projections of high single-digit percentage profit growth starting in 2026, fueled by steady demand and anticipated cost reductions.

Several other firms have also recently expressed increased confidence in Haleon's prospects. Morgan Stanley upgraded the stock to ‘Overweight,' citing the company's strong position in defensive market segments and greater clarity around margin expansion. BNP Paribas Exane followed suit, upgrading Haleon to ‘Outperform,' further bolstering the positive sentiment surrounding the stock.

Haleon's strategic initiatives are also contributing to the improved outlook. The company has initiated a £330 million share buyback program, signaling confidence in its financial position and a commitment to enhancing shareholder returns. This buyback follows Pfizer's sale of its entire stake in Haleon, a move that removes a significant overhang on the stock.

However, not all analysts are universally bullish. Bernstein recently downgraded Haleon to ‘Market Perform,' citing concerns about Oral Care segment growth and increased competition. This highlights the importance of Haleon consistently delivering on its growth targets to justify further market re-rating.

Despite Bernstein's cautious stance, the overall trajectory appears positive. Haleon's focus on productivity savings, targeting £800 million over the next five years, and a 30% annual reduction in working capital, are expected to significantly enhance cash flow. These operational improvements, combined with a favorable market outlook, are positioning Haleon for sustained growth.