Stock Analysis

Haleon plc Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

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Haleon plc (LON:HLN) last week reported its latest annual results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Haleon

LSE:HLN Earnings and Revenue Growth March 22nd 2023

After the latest results, the 14 analysts covering Haleon are now predicting revenues of UK£11.5b in 2023. If met, this would reflect a modest 5.6% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 53% to UK£0.18. Before this earnings report, the analysts had been forecasting revenues of UK£11.4b and earnings per share (EPS) of UK£0.18 in 2023. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at UK£3.42. 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. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Haleon'shistorical trends, as the 5.6% annualised revenue growth to the end of 2023 is roughly in line with the 6.5% annual revenue growth over the past three years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 3.4% annually. So it's pretty clear that Haleon is forecast to grow substantially faster than its industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at UK£3.42, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Haleon analysts - going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Haleon (of which 1 is a bit concerning!) you should know about.

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