Haleon PLC (LSE:HLN, NYSE:HLN) shares recouped some of their losses since being spun out of GSK earlier this year as the consumer healthcare group rejected any liability in the Zantac lawsuits that have hit its parent hard.
As well as publishing its maiden interim results, including a 13.4% increase in revenues £5.2bn and a 22% jump in profits, the FTSE 100-listed group said it had rejected requests from GSK and Pfizer to provision for costs related to the Zantac lawsuits in the US.
"Haleon has notified GSK and Pfizer that it rejects their requests for indemnification on the basis that the scope of the indemnities set out in the joint venture agreement only covers their consumer healthcare businesses as conducted when the JV was formed in 2018. At that time, neither GSK nor Pfizer marketed OTC Zantac in the US or Canada," it said as part of its results statement.
GSK shares have lost 19% since news broke of the legal claims in early August, with the issue weighing heavily on Pfizer's and a slew of pharma stocks.
Haleon lost around a quarter of its value since listing at 330p in mid-July to a low of just over 241p, though they have rallied slightly this month.
On Tuesday they were up over 4% to 270p, by early afternoon.
With regard to Zantac, Steve Clayton, fund manager at Hargreaves Lansdown, said his team "do not see significant financial costs, other than those of defending the litigation, being incurred by Haleon".
"With strong cash flows, Haleon should rapidly deleverage, which will help to drive financial returns higher, over and above the growth from the brands portfolio. Haleon should have excellent dividend growth potential over the longer term as a result,” he said.
Victoria Scholar, head of investment at Interactive Investor, felt the results were "largely upbeat with strong top and bottom-line growth".
"Although a more challenging economic backdrop lies ahead, some of this pain will be offset by a strong cold and flu season for Haleon, boosting demand for some of its products.
"As a seller of mostly consumer staples, Haleon looks set to be relatively well positioned to navigate an economic downturn. The biggest risk is if consumer trade down from branded products like Panadol, Advil and Aquafresh to cheaper unbranded rivals instead. Uncertainty around Zantac remains another overhang for the shares."
Scholar noted that there are a large number of 'hold' recommendations on Haleon, "suggesting the analyst community is still unsure about the company’s prospects".
Also felt the company's earnings "should be resilient in the face of economic weakness given they address real and recurring consumer needs".