Haleon Earnings: Tough Comparisons Dampen Sales but Demand and Margin Shine; Shares Fairly Valued

Wide-moat Haleon reported first-quarter earnings that came in largely as we expected. Total sales of GBP 2.9 billion were down 2.2% year over year, with price and volume/mix contributing 5% and negative 2%, respectively. Unfavorable foreign exchange, which we estimate pulled back growth by a midsingle digit, proved to be a significant headwind but solid demand among key brands helped deliver decent results. After adjusting our near-term assumptions and accounting for time value of money impacts, we slightly tick up our fair value estimate to $8.80 per share from $8.70.