Haleon Shares Removed as Top Pick at Morgan Stanley

Haleon (LON: HLN) shares are up more than 21% so far this year, but last week pulled back slightly, with Friday's 0.4% decline not helped by an analyst note.

Morgan Stanley revealed at the end of the week that it has now removed Haleon as a Top Pick, although it maintains an Overweight rating on the stock, lifting the price target to $10.95 from $9.90 a share.

The bank stated that given the stock's rise so far this year, it now offers less potential upside.

Nevertheless, Morgan Stanley still believes the company has “best-in-class market share trends,” while an easier comparator in the second half of the year is expected to drive further volume and growth acceleration, “supporting further outperformance relative to European Staples peers” over the next 12 months.

Furthermore, Morgan Stanley said that given the continued consumer weakness across most categories in key markets, such as the US and China, they “think Haleon's consistency of delivery will support further outperformance relative to HPC/Food peers from here.”

Goldman Sachs took a similar stance on the stock last month, although it downgraded Haleon to Neutral from Buy, raising the price target to 380p from 360p.

The bank said Haleon was trading at a 5% premium with staples versus a 16% discount historically and that as the stock has reached several key milestones, it saw limited catalysts to drive near-term price performance.