Haleon PLC (LSE:HLN, NYSE:HLN) offers "the best of both worlds", said Citigroup, as it started coverage of the London consumer healthcare newcomer.
After it was spun out of GSK PLC (LSE:GSK, NYSE:GSK) on Monday and floated its ADRs in New York yesterday, the investment bank slapped a 'buy' rating on the Weybridge, Surrey-based group's shares, with a 360p price target.
Analyst Cedric Besnard said he sees the company as "the best vehicle to play the secular attractions" of the consumer health sector, facilitated by the group's large scale "and its exposure to staples segments where it can more easily outperform".
While the 4-6% organic sales growth target has raised a few eyebrows elsewhere in the City, the Citi team said their analysis suggests it "is achievable".
"While consumer health specifics can sometimes tempt companies into overearning," Besnard said, Haleon's P&L structure is "well invested to support a LDD TSR [low double-digit total shareholder return]".
READ: As Haleon shares squeezed by investor scepticism could a new bid emerge?
The analyst said Haleon has "a strategic optionality offering a floor to valuation," which maybe means he suggests that it could be a bid target, based on the £50bn Unilver offer.
Based on this, Citi believes the stock "offers the best of both worlds" with the "dependability" of consumer health and the "ability to outgrow" in staples.