Haleon's third-quarter update won’t be game-changing but will support a longer-term debt reduction thesis, suggests Citi.
Organic sales growth should be 5.2% (prices +4.7%), says the US bank, with a likely 3.9% increase forecast for the fourth quarter with flu volumes the drag.
“We think increased comfort on deleveraging, an unchanged guidance on like-for-like earnings (LFL EBIT) growth, and little vulnerability to COGS/pricing dynamics should support the debt-to-equity value transfer narrative while gradually alleviating overhangs by giving the company more leeway,” Citi added.
Haleon, which owns well-known brands such as Sensodyne toothpaste and Panadol painkillers, reported a 10.6% increase in revenue to £5,738 million in the six months ended 30 June 2023, and upgraded guidance for the full year.
Spun off from GSK in July 2022, other pharma groups are now looking to do the same with their household arms giving Haleon’s steady performance.
French group Sanofi today announced it potentially separate its consumer healthcare division by listing it on the capital markets by the end of next year.
If the initial public offering (IPO) occurs, it would be the third of its kind following Haleon and Johnson & Johnson (NYSE:JNJ)'s demerger of chemist shelf staples.