Jefferies raised its price target on Haleon to 410 pence from 400 pence and maintained a 'Buy' rating, citing evidence that management-led restructuring is gaining traction and delivering stronger-than-expected margins.
The consumer healthcare group reported a 160-basis-point expansion in operating margin during the first half of 2026, reaching 24.3%, while organic sales grew 2.6%. Second-quarter organic sales growth accelerated to 3.1%, driven by 1.7% price growth and 1.4% volume and mix gains. Gross margin expanded by 140 basis points, supported by productivity improvements.
Jefferies projects Haleon’s 2026 sales at £11.45 billion, 0.5% above consensus, with organic sales growth of 3.7% and earnings per share of 21.11 pence. For 2027, the bank forecasts sales of £11.97 billion and organic sales growth of 5.1%, with EPS of 22.64 pence after a 4.5% downward revision due to a dividend-share buyback accounting correction.
Haleon’s North America segment returned to 3.1% growth in Q2, up from 1% in Q1, while emerging markets grew 6.3%. Europe recorded a modest 0.4% increase amid low-single-digit volume declines. Oral Health led growth at 6.2%, followed by Pain Relief at 4.6% and Digestive Health at 5.5%. Respiratory sales fell 6.5% due to a weak cold and flu season in the US, Central and Eastern Europe, and China.
The brokerage noted that Haleon’s H1 margin expansion of 160 basis points was achieved with only 3% growth in advertising and promotion spending, raising questions about whether the gains could be perceived as 'excess profits.' Analysts also highlighted that Haleon needs organic sales growth above 5% in the second half of 2026 to meet the midpoint of its annual guidance.
Haleon’s shares closed at 363.10 pence on August 21, implying a 13% potential upside to Jefferies’ new target.
