Haleon PLC (LSE:HLN, NYSE:HLN) was the biggest faller on the FTSE 100 on Wednesday morning after JPMorgan fired off a warning shot ahead of the Sensodyne and Panadol maker's annual results next month.
After Haleon delivered strong volumes versus sector peers in the consumer staples sector over the past two years, the investment bank now expects the top line to disappoint as the tailwinds that boosted its over-the-counter divisions abate.
Volumes "should remain pressured" with a 2% fall forecast for the final quarter of last year and 0.1% for 2024 as a whole, while the bank sees sequential improvement for peers.
This, it said, reflects the unravelling of Covid-led tailwinds such as higher flu incidence and the "muted" performance in the rest of the business, where volume growth in toothpaste and Centrum vitamins has stalled and category growth is subdued.
For 2024, group like-for-like growth of 3.7% is forecast, below Haleon’s stated strategy of 4-6%, and even with £300 million of promised cost savings, "pedestrian" profit margin rises are expected given headwinds in the year of slowing volumes, slower OTC, unhelpful forex and dilution from the Lamisil disposal.
JPM has cut its 2023 earnings per share forecast by 1% on the lower top-line and FX hit, and 2024 EPS also by roughly 1% on lower top-line and margin.
The bank's share price target for Haleon was trimmed to 290p from 295p before.
Full-year results from the group, which was spun out of GSK in 2022, are scheduled for 'leap day', 29 February.