Analysts are divided over fast-moving consumer goods big cap Haleon PLC (LSE:HLN, NYSE:HLN)’s prospects prior to the FTSE 100-listed firm’s annual results next month.
According to Jefferies, Haleon is well-positioned to exceed both its organic sales and operating profit growth forecasts, placing it at the higher end of its full-year guidance.
For the fourth quarter, Jefferies maintains its like-for-like growth forecast at 6.9%, outpacing the 5.4% consensus.
This optimistic stance is extended to the full year 2023, with a predicted LfL growth of 8.1%, surpassing both the consensus of 7.7% and Haleon's own guidance range of 7-8%.
Despite this strong growth trajectory, the firm has slightly adjusted its forecast for Haleon's operating margin for the full-year to 22.8%, a marginal reduction influenced by adverse foreign exchange conditions.
However, the forecast for full-year margins remains stable at 2%.
Jefferies expects Haleon to deliver a fourth-quarter performance that surpasses the consensus, bolstered by robust pricing strategies, especially in the US market.
Jefferies analysts have Haleon at a buy with a 385p price target, implying a 21% upside to the 318p publication price.
The bear(ish) case
On the other hand, Deutsche Bank reduced its share price target from 360p to 350p, indicating a more cautious approach to the stock.
Tom Sykes of Deutsche Bank noted that the forecast adjustments are modest, with the fiscal year like-for-like growth projection being reduced from 7.6% to 7.5%.
This figure sits marginally below the consensus estimate of 7.7%. However, the forecast for fiscal year 2024 remains unchanged at 4.2%, against a consensus of 4.6%.
One of the key changes in the forecast involves the operating margin for the fiscal year 2023, which is now expected to be 22.7%, a slight decrease from the earlier projection of 22.9%.
This revision accounts for a higher translation impact due to foreign exchange fluctuations and some dilution from the Lamisil division.
Looking ahead to fiscal year 2024, Deutsche Bank has also revised its operating margin forecast down from 23.2% to 23%.
Haleon’s full-year results are due on 29 February.