Haleon (HLN) share price recovery faces one key hurdle

Haleon (LON:HLN) share price moved sideways this week after the company published its trading statement. The stock was trading at 340p on Wednesday, where it has been at in the past few days. It has risen by ~10% from the lowest point in September and by ~42% from last year’s lowest point. 

Is Haleon a good investment?

Haleon is one of the biggest players in the consumer health industry. It owns some of the best-known products across sectors like oral health, vitamins, minerals and supplements, respiratory, pain relief, and digestive health.

Some of the top brands owned by Haleon are Sensodyne, Parodontax, Centrum, Panadol, and Voltaren. Its biggest peer in the industry is Kenvue, which was recently spun from Johnson & Johnson. It owns products like Listerine, Neutrogena, Tylenol, and Band-Aid. Haleon is valued at over $39 billion while Kenvue has a market cap of over $37 billion.

Haleon share price moved sideways this week after the company published a modest trading statement. The firm expects its revenue for the year to grow by between 7% and 8%. It also expects its adjusted profit growth will be between 9% and 11%.

Haleon is seeing modest growth across all its segments and across all regions. Its North America revenue growth was 4.7% while its EMEA and Asia Pacific was 14.9% and 11.6%. A key challenge is that the company is seeing adverse forex issues because of the strong US dollar. Its USD transactions account for 33% of its total revenue, with the euro and Chinese yuan having the next share. 

Still, a case can be made about Haleon, despite its slow revenue growth. It has some of the top brands globally and is able to adjust its prices when inflation rises. The key challenge for the company is that it is not a cheap company to invest in. It has an EV to EBITDA ratio of 14.48, slightly higher than Kenvue’s 11.89.

Haleon share price forecast

The daily chart shows that the HLN stock price formed a double-bottom pattern at 307.80p in July and September. In price action analysis, this pattern is one of the most bullish signs in the market. The shares recently moved above the 25-day and 50-day moving averages.

Further, it is now hovering at the neckline of the double-top at 341p. The Relative Strength Index (RSI) is nearing the overbought level and formed an ascending channel. Therefore, the outlook for Haleon is neutral with a bullish bias. 

This view will be confirmed if the price moves above the resistance at 343.7p. A move above that level will see it rise to the key resistance at 355p, the highest point this year.

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