Advertisement
UK markets open in 3 hours 24 minutes
  • NIKKEI 225

    38,165.19
    -1,429.21 (-3.61%)
     
  • HANG SENG

    17,064.49
    -246.56 (-1.42%)
     
  • CRUDE OIL

    76.95
    -0.64 (-0.82%)
     
  • GOLD FUTURES

    2,367.10
    -48.60 (-2.01%)
     
  • DOW

    39,853.87
    -504.23 (-1.25%)
     
  • Bitcoin GBP

    49,797.38
    -1,376.55 (-2.69%)
     
  • CMC Crypto 200

    1,305.55
    -60.34 (-4.42%)
     
  • NASDAQ Composite

    17,342.41
    -654.99 (-3.64%)
     
  • UK FTSE All Share

    4,468.59
    -10.90 (-0.24%)
     

Haleon plc Just Missed Earnings - But Analysts Have Updated Their Models

Shareholders might have noticed that Haleon plc (LON:HLN) filed its annual result this time last week. The early response was not positive, with shares down 3.3% to UK£3.16 in the past week. It looks like a pretty bad result, all things considered. Although revenues of UK£11b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 25% to hit UK£0.12 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Haleon

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Haleon's 13 analysts is for revenues of UK£11.4b in 2023, which would reflect a reasonable 5.3% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 65% to UK£0.19. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£11.4b and earnings per share (EPS) of UK£0.18 in 2023. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

ADVERTISEMENT

There's been no major changes to the consensus price target of UK£3.45, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Haleon analyst has a price target of UK£4.00 per share, while the most pessimistic values it at UK£2.50. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 5.3% growth on an annualised basis. That is in line with its 6.5% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.3% per year. So although Haleon is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Haleon's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Haleon going out to 2025, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 2 warning signs for Haleon that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here