Haleon PLC Share Price Analysis: Is a Bullish Reversal on the Horizon?
Financial Analysis
Pros – Improvements in 2024 vs. 2023
- Net Income Growth
- 2024: £1.442M
- 2023: £1.049M
- ↑ Increase of 37.4%
- Implication: Strong bottom-line improvement reflects better control over costs and improved operational efficiency.
- Improved Operating Income
- 2024: £2.206M
- 2023: £1.996M
- ↑ Increase of 10.5%
- Shows stronger core business performance.
- Stable Revenue with Improved Profitability
- Revenue stayed flat (£11.233M in 2024 vs. £11.302M in 2023), but:
- Gross profit slightly increased: £6.824M vs. £6.747M
- Indicates better cost management (despite static top-line growth).
- Reduced Operating Expenses
- 2024: £4.618M
- 2023: £4.751M
- ↓ Decrease of 2.8%
- Sign of tightened cost controls and potential efficiency gains.
- Improved EPS (Earnings Per Share)
- Basic and Diluted EPS in 2024: £0.16
- 2023: £0.11
- ↑ ~45% increase
- Positive for shareholders and investor confidence.
- EBIT and EBITDA Gains
- EBIT: £2.304M (↑ 12.8%)
- EBITDA: £2.628M (↑ robust from £2.042M)
- Stronger core profitability and cash generation.
Cons – Areas of Concern for 2024 and Going Forward
- Stagnant Revenue Growth
- Revenue has remained flat from 2023 to 2024 (£11.233M vs. £11.302M).
- No topline growth could indicate market saturation or pricing pressure.
- Next 6 months: Without revenue growth, long-term profit expansion could be limited.
- High Interest Expense
- £394K in 2024, only slightly down from £414K in 2023.
- Net interest income remains negative (-£339K).
- This continues to be a drag on net income and could worsen if interest rates remain elevated.
- Tax Provision Still High
- Only a slight reduction from £517K to £435K.
- Effective tax rate still eats significantly into pre-tax profits.
- No Increase in Share Count
- Stagnant basic and diluted shares suggest no equity financing, which is good for dilution but may also indicate limited investment or expansion.
- External Income Volatility
- Interest income is minor and fluctuating, showing no consistent trend to offset expense burden.
- External financing costs could pose challenges if debt is not restructured.
Outlook for the Next 6 Months
Opportunities:
- Stronger net income and margins allow room for reinvestment, debt reduction, or shareholder return.
- Efficient cost management suggests room to scale up without significant increases in expenses.
- Stable EPS growth may attract investors and support stock valuation if applicable.
Risks:
- Flat revenue is a warning sign. Without growth, profitability has a ceiling.
- Debt servicing is eating into earnings—any increase in rates or refinancing needs could impact 2025 results.
- Limited innovation or expansion visible in numbers—if this persists, growth may stall
Technical Analysis
Haleon PLC's share price has recently approached the lower boundary of its long-standing trading channel, which it has remained within for the past 10 months. Currently trading around 368p per share, the stock has experienced a notable pullback from the upper trendline resistance. This price action suggests that bearish momentum may be fading, with signs emerging of a potential neutral to bullish reversal in the near term.
Technical Indicators Suggest a Possible Shift
Several key technical indicators are aligning to support this changing outlook:
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MACD Turning Bullish: On the daily timeframe, the MACD (Moving Average Convergence Divergence) is showing early signs of a bullish crossover, the first time this signal has appeared since late May.
-
RSI Near Oversold: The Relative Strength Index (RSI) has been either oversold or hovering near oversold territory over recent weeks, indicating that the stock may be primed for a bounce if buying pressure increases.
Historical Pattern Echoes a Bullish Case
Interestingly, the current chart setup resembles the scenario observed back in November 2023, when Haleon’s share price rebounded sharply from similar technical conditions, gaining approximately 9%. While there is no guarantee of a repeat performance, the resemblance suggests that a short-term rally could be on the cards.
Conclusion: Watching for a Breakout
In summary, Haleon PLC stock is trading near a key support level within its established price channel. With technical indicators pointing towards a shift in momentum and historical patterns supporting the case for a bullish reversal, traders and investors may want to keep a close eye on this stock in the coming days.
If buyers step in at these levels, Haleon’s share price could see a potential bounce, offering short-term trading opportunities as market sentiment improves.
(Sources: yahoofinance.com)
