Since Haleon’s (LSE:HLN) demerger with GSK and independent listing on the FTSE 100 last month, its shares have been falling. I can’t help but wonder if the Haleon share price falls into the category of a prime buying opportunity for my holdings with a view to a recovery? Let’s take a closer look.
Haleon share price journey
As a quick reminder, Haleon is now the largest standalone consumer healthcare goods business in the world. This comes after its demerger from global giant GSK. Some of its best known brands are staples in many consumer’s medicine cabinets, mine included, and include Night Nurse, Beechams, Piriteze, and Sensodyne to name a few.
So what’s the current state of play with the Haleon share price? Well, the shares listed last month for a price of 320p per share. As I write, they’re trading for 268p, which is a 16% decline in approximately a month. It is worth noting that the listing was the largest in Europe for close to a decade.
The investment case
Let’s start with some positives around Haleon shares then. I am buoyed by a few key elements. Firstly, the strength and brand power of some of its brands is unrivalled in the consumer healthcare market. These could help boost sales, performance, investor sentiment, and returns in the longer term.
Next, I noticed that a number of insiders have been buying shares since the Haleon share price listed. I find this positive, as who better to attest to the direction and potential of a business than those with an inside track. Haleon Chairman Sir Dave Lewis purchased £200,000 worth of shares just after the listing. Furthermore, two non-executive directors spent approximately £65,000 on shares too.
Finally, Haleon upgraded its forecast for its first full-year update when it released a half-year report at the end of July. The H1 update made for excellent reading, in my opinion. Revenue increased by close to 14% compared to the year previous, driven by organic growth, higher prices, and increased volumes. It also pointed towards the power-boosting performance of certain of its brands, namely Panadol, Advil, and Centrum. However, the positive report did not boost the Haleon share price.
So to some risks associated with Haleon shares then. Firstly, macroeconomic headwinds could have a longer-term impact on results and returns. Soaring inflation, the rising cost of materials, as well as the global supply chain issues could affect profitability and operations.
Next, I’m a bit worried by Haleon’s current debt levels. Debt is usually a red flag for me because it can impact levels of returns and future growth plans. I want to see further results and how the company plans to pay down debt, as well as growth plans to learn more.
What I’m doing now
I do believe that Haleon could be a good stock to buy for growth and returns in the longer term. Furthermore, analysts believe the Haleon share price will recover and increase steadily. I am keen to learn a bit more about the company’s direction, as well as its plan to combat current debt levels in the coming months and updates ahead, however.
