Berenberg downgrades Haleon to 'hold', cites higher execution risk

(Sharecast News) - Analysts at Berenberg downgraded Haleon from 'buy' to 'hold' on Monday after another weak top‑line performance and reduced growth visibility. Berenberg, which also cut its price target on the stock to 365p from 514p, said Haleon's third‑quarter update delivered "another disappointing print", with a mix of company‑specific issues and seasonal drags prompting a fresh guidance cut.

While investments in organisational agility were beginning to show results, cost savings continued to support operating profit growth and free cash flow remained strong, Berenberg said inconsistent revenue delivery had eroded confidence in Haleon's ability to reach the upper end of its 4% to 6% medium‑term organic‑growth algorithm.

Organic sales rose 2.6% in Q3, below the 3.4% consensus, with volume up just 0.5%. Asia‑Pacific growth of 3.9% missed expectations for 6.3%, partly due to the halt in OTC Centrum sell‑in to China following a raw material reclassification - a 50bp drag expected to repeat in Q4. North America grew 2.5%, held back by weaker cold‑and‑flu ordering and softer consumer demand, while Europe declined 0.6% as pricing failed to offset a 2.7% volume/mix drop. International grew 6.9%, ahead of forecasts.

Haleon now expects roughly 2.5% organic sales growth for FY26, down from 3% to 5%, though it still anticipates high‑single‑digit adjusted operating profit growth.

Berenberg cut its near‑term estimates, lowered medium‑term growth assumptions to the bottom of its algorithm range and reduced buyback expectations, citing higher execution risk.



Reporting by Iain Gilbert at Sharecast.com