Jefferies has raised its price target for Haleon (Haleon PLC (LSE:HLN, NYSE:HLN), the consumer health company behind Sensodyne and Advil, to 410p from 400p, maintaining its Buy rating.
The broker highlighted a 70 basis point margin beat in the first half of the year, though it warned this revived concerns about whether Haleon was investing enough behind growth.
Haleon shares rose 0.28% to 364.10p in morning trading on Monday, after opening at 363.10p, with the stock reaching an intraday high of 364.50p.
Haleon delivered organic sales growth of 3.1% in the second quarter, split between a 1.7% rise in prices and a 1.4% increase in volumes.
Oral Health grew 6.2%, driven by the Sensodyne and Parodontax brands, while Pain Relief accelerated 4.6% on Voltaren gel expansion.
Respiratory products declined 6.5% amid a weak cold and flu season in the United States, central and eastern Europe, and China.
North America returned to growth of 3.1%, which Jefferies said showed a management-led turnaround was gaining traction.
Emerging markets grew 6.3%, led by China, while Europe delivered a more modest 0.4% rise.
Gross margin expanded 140 basis points on productivity savings, funding increased marketing spend while still lifting operating margin by 160 basis points to 24.3%.
Jefferies said Haleon needs growth of more than 5% in the second half to reach the midpoint of its full year guidance.
The broker expects a rebound in respiratory products, broader growth in the United States, and accelerating emerging market sales to drive that improvement.
Failure to deliver could reignite investor concerns that Haleon is not spending enough to support growth, the broker said.
