Haleon PLC (LSE:HLN, NYSE:HLN) will find it difficult to get a significant re-rating for its shares, reckons Deutsche Bank.
Following a meeting with the FTSE 100-listed consumer healthcare group's management, analyst Tom Sykes at the bank issued a note where he said the company has "a collection of quality brands but is still levered and is still very 'new' as an entity which brings with it some risk".
Haleon demerged from parents GSK and Pfizer last summer, with brands including Sensodyne and Aquafresh in toothpastes, Panadol and Voltarol in painkillers, Centrum in vitamins, mineral and supplements (VMS), and Ortivin and Theraflu in respiratory. Last week's results showed it had net debt of £9.9bn, 3.6 times adjusted earnings.
While there are "positive" long-term trends in consumer healthcare in developed and emerging markets, it is "difficult to get away from the swing factor every year of their seasonal brands", the analyst said.
As the company has around 15% exposure to respiratory and there is seasonal exposure via pain and VMS, it is "difficult", in his view, "for the company to get a significant re-rating, unless you are near the trough of a year on year decline in the seasonal business, and we are somewhere near the peak".
Deutsche reiterated a 'hold' rating and 300p target price, which sits below the last close of 315.8p.