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Haleon PLC ADR HLN

Morningstar Rating
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Stock XNYS Rating as of
$8.33 +0.01 (0.12%)
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As of Delayed Price Closed
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Company Report

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Haleon: Exits Smoking Cessation Business Outside US to Focus on Power Brands

Keonhee Kim

Wide-moat Haleon announced on June 26 that it entered into an agreement to divest its smoking cessation business outside the US to no-moat Dr. Reddy’s for GBP 500 million (GBP 458 million upfront plus performance-based payments of up to GBP 42 million). The portfolio includes brands like Nicotinell, Nicabate, and Habitrol. The deal is expected to close during the last quarter of 2024 at the earliest. We do not expect material changes to our model from this deal and maintain our fair value estimate of $8.80, or GBX 352, per share for Haleon and $60 per share for Dr. Reddy’s.

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Price vs Fair Value

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HLN is trading at a 826% premium.
Price
$8.33
Fair Value
$7.50
Uncertainty
Medium
1-Star Price
$66.34
5-Star Price
$6.74
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

We expect Haleon, with financial and operational independence, to bolster its portfolio through product innovation and tuck-in acquisitions and expand the strong foothold it has in the consumer self-care industry.

Bears

Personalization of health paves way for smaller niche players to carve out their shares of the market with bespoke offerings and Haleon will have a tough time fighting for these areas given the difficulty to cater to these consumers with their megabrands.

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Trading Information

Previous Close Price
$8.32
Day Range
$8.25–8.34
52-Week Range
$7.70–8.96
Bid/Ask
$8.18 / $8.38
Market Cap
$38.04 Bil
Volume/Avg
2.5 Mil / 5.2 Mil

Key Statistics

Price/Earnings (Normalized)
18.12
Price/Sales
2.73
Dividend Yield (Trailing)
1.83%
Dividend Yield (Forward)
2.56%
Total Yield
1.83%

Company Profile

Haleon is one of the largest consumer health companies in the world. Formed by a combination of consumer health divisions of GSK, Pfizer, and Novartis, Haleon separated from GSK and went public in July 2022. The firm generates 60% of sales from global power brands including Sensodyne, Advil, Centrum, and Poligrip, that play in many geographies and are often leaders in their respective categories. It also has a number of local brands, including Emergen-C, Eno, Tums, and Caltrate, that are more tailored to regional needs and have strong local brand equity. Overall, Haleon’s brands tackle a variety of silos within consumer health including oral care, digestive health, pain relief, and nutrition.
Sector
Healthcare
Industry
Drug Manufacturers - Specialty & Generic
Stock Style Box
Large Core
Total Number of Employees
25,408
Website
https://www.haleon.com

Competitors

Valuation

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Metric
HLN
RKT
PG
Price/Earnings (Normalized)
 18.129.4725.09
Price/Book Value
 1.823.637.85
Price/Sales
 2.732.114.82
Price/Cash Flow
 17.2111.3919.99
Price/Earnings
HLN
RKT
PG

Financial Strength

Metric
HLN
RKT
PG
Quick Ratio
 0.630.400.40
Current Ratio
 1.040.640.69
Interest Coverage
 4.949.0020.73
Quick Ratio
HLN
RKT
PG

Profitability

Metric
HLN
RKT
PG
Return on Assets (Normalized)
 —8.60%13.82%
Return on Equity (Normalized)
 —26.61%35.61%
Return on Invested Capital (Normalized)
 —14.24%20.62%
Return on Assets
HLN
RKT
PG
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