Consumer health group Haleon reported first-half 2026 operating margins that exceeded expectations by 70 basis points, driven by a 160 basis-point expansion to 24.3% and a 140 basis-point rise in gross margins. The London-listed company’s second-quarter organic sales growth accelerated to 3.1%, supported by a 6.2% increase in oral health and a 4.6% rise in pain relief, though respiratory sales declined 6.5%. North America returned to 3.1% growth after a 1% gain in the first quarter, while emerging markets grew 6.3% and Europe delivered 0.4% growth.
Jefferies raised its price target on Haleon to 410 pence from 400 pence, maintaining a Buy rating and implying a 13% upside from Monday’s close of 363.10 pence. The broker also lifted its 2026 sales forecast to £11.45 billion, 0.5% above the Visible Alpha consensus, and raised its organic sales growth estimate to 3.7% from 3.5%. For 2027, Jefferies projects sales of £11.97 billion and organic growth of 5.1%, versus consensus of £11.88 billion and 4.5%, respectively.
The firm’s 2026 earnings-per-share estimate stands at 21.11 pence, 0.5% above consensus, while the 2027 EPS estimate is 22.64 pence, following a 4.5% downward adjustment reflecting a shift from share buybacks to dividend payouts. Haleon’s first-half organic sales growth of 2.6% trails the 5% plus required in the second half to meet full-year guidance, underscoring the uneven recovery across regions and product lines.
Jefferies described the second quarter as "a cleaner Q2 than feared," citing North America’s rebound as evidence that a management-led reset is gaining traction. However, the broker warned that the 160 basis-point margin expansion achieved with just 3.2% advertising and promotion growth could reignite concerns over over-earning, potentially undermining confidence in Haleon’s sales framework. The stock trades at a 12-month forward price-to-earnings ratio of 16 times, with potential upside to 17.5 times contingent on sustained growth and margin delivery.
