| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 185.82 | -51 |
| Intrinsic value (DCF) | 160.04 | -58 |
| Graham-Dodd Method | 0.73 | -100 |
| Graham Formula | 1.19 | -100 |
Haleon plc (LSE: HLN) is a leading global consumer healthcare company headquartered in Brentford, UK, specializing in over-the-counter (OTC) health products. Formed in 2021 as a spin-off from GSK, Haleon boasts a diversified portfolio of trusted brands including Panadol, Voltaren, Advil, Sensodyne, and Centrum, catering to oral health, pain relief, respiratory health, and vitamin supplements. Operating across North America, Europe, Asia Pacific, and emerging markets, Haleon leverages strong R&D capabilities and extensive distribution networks to serve millions of consumers. As a pure-play consumer healthcare firm, it benefits from stable demand in the £150bn+ global OTC market, with a focus on innovation in self-care trends. The company's asset-light model and strong cash flows position it well in the defensive healthcare sector.
Haleon presents a compelling investment case as a market leader in the resilient consumer healthcare sector, with 2023 revenue of £11.2bn and operating cash flow of £2.3bn. The stock's low beta (0.21) suggests defensive characteristics, while its 3.5% dividend yield offers income appeal. However, high leverage (net debt/EBITDA ~3x) and £10.1bn debt load from its spin-off constrain financial flexibility. Growth depends on successful brand reinvestment (6.6% of sales in R&D) and emerging market expansion, particularly in Asia. Valuation appears reasonable at ~16x P/E, but investors should monitor margin pressures from input costs and private label competition. The separation from GSK provides strategic focus but removes pharmaceutical segment diversification.
Haleon holds the #2 global position in consumer health behind Johnson & Johnson's Kenvue, with particular strength in oral care (Sensodyne's 12% global toothpaste share) and pain relief (Panadol/Advil). Its competitive edge stems from: 1) Ownership of 20+ power brands with 85% holding #1 or #2 market positions, 2) Direct access to 500k+ retail outlets globally, 3) Significant scale advantages in R&D (£740m annual spend) and marketing, and 4) Geographic diversification (no single market >30% of sales). However, it faces intensifying competition from pharma companies divesting OTC assets (Sanofi, Pfizer) and private label growth (now 18% of EU OTC sales). Haleon's innovation pipeline (30% sales from products launched in last 3 years) helps defend margins, but its lack of prescription drug capabilities unlike Bayer or GSK limits cross-portfolio synergies. The company's UK tax base provides an advantage versus US-domiciled peers.