Barclays downgraded consumer health company Haleon to “equal weight” from “overweight,” cutting its price target to 380p from 430p, citing prolonged weakness in the United States and fresh headwinds in Latin America and Europe, in a note dated Tuesday.
Shares of the British company were down 3% at 05:55 ET (09:55 GMT).
Shares closed at 357p on Monday, leaving only 6.5% potential upside to the revised target. Barclays forecast Haleon’s 2025 organic sales growth at 3.1%, below the company’s lowered guidance of around 3.5%.
The U.S., which represents 34% of Haleon’s revenue, has been central to the downgrade.
Barclays said the business there is under strain from slower category growth and destocking, particularly in drugstores, which hold nearly twice the inventory levels of mass retailers.
“The issue is that it is trying to make this adjustment in a period of huge consumer pressure and an unprecedented level of channel shift, especially in the U.S.,” the brokerage said.
CEO Brian McNamara acknowledged inventory challenges, telling Barclays’ Global Consumer Conference, “We have very good visibility on inventory… They tend to hold higher inventory levels. We are not seeing those numbers swing higher. The risk is, inventories go lower, and then it results in out of stocks in the store.”
Barclays analysts said proactive destocking could mean short-term pain as the company clears shelves ahead of 2026.
Consumption trends also remain weak. NielsenIQ data showed Haleon’s U.S. sales growth slipped to -2.6% in August, trailing a declining market down 2.2%
Barclays highlighted categories such as smokers’ health, where Haleon’s brands face steep competition from cheaper private-label products.
McNamara noted, “Smokers’ health is a category that certainly is under more pressure in a $30 to $40 price point kind of range for consumers that are really under a lot of pressure and feeling it.”
Beyond the U.S., Barclays pointed to slowing demand in Mexico and Brazil, where macroeconomic pressures are prompting consumers to prioritize essentials.
In Europe, it said pricing pressure in Germany could weigh on performance in 2026 as large retailers push back against increases. These factors, the analysts said, make it “50/50 whether it can hold its 3.5% FY OSG guide.”
Despite the downgrade, Barclays acknowledged Haleon’s strong oral care business and margin improvement. The company reported a 160-basis-point gross margin expansion in the first half of 2025 and has identified £800 million of cost savings between 2026 and 2030.
Still, the brokerage said earnings growth alone is insufficient to drive outperformance.
“Margins and earnings growth will unlikely be enough to deliver outperformance if Haleon doesn’t show an inflection in the U.S.,” the brokerage said.
Barclays said Haleon trades at 19.4x forecast 2025 earnings, a 5% discount to the European staples sector but a premium to rivals Reckitt and Kenvue.
However, analysts said it is difficult to justify a premium to Unilever, which has delivered steadier U.S. growth.
For now, Barclays said it has “more confidence in Unilever’s OSG algo in 2026” and will wait for signs of a turnaround in Haleon’s largest market.
Source :
https://www.investing.com/news/stock-market-news/barclays-downgrades-haleon-to-equal-weight-cuts-price-target-on-us-weakness-4240050
