Haleon share price analysis: where technicals meet fundamentals

Haleon (LON: HLN) share price retreated even after the company published strong financial results and boosted its forward guidance. The stock plunged to a low of 323p, the lowest point since July 19th. It has dropped by more than 5% from the highest point this year.

Strong financial results

Haleon, the biggest consumer health company in the world, had a strong performance in the first half of the year. The company’s revenue jumped by 10% to £5.73 billion, helped by price and volume mix.

The company’s power brands, including Sensodyne, parodontax, and panadol saw thor organic revenues grow by 10.1%. Most importantly, Haleon said that 55% of its products gained market share in the industry.

Haleon’s adjusted operating profit rose by 8.9% to £1.27 billion while its reported operating profit rose by 26.8% to £1.14 billion. Most importantly, the company upgraded its forward guidance as it expects its organic revenue growth to be between 7% and 8%. In a statement, the company’s CEO said:

“Whilst we continue to expect a challenging environment given further pressure on consumer spending and global geopolitical and macroeconomic uncertainties, we remain confident in the resilience of Haleon’s incredible portfolio.”

I believe that Haleon is a good investment for three main reasons. First, the company has some of the best-known brands in the world, including Panadol and Sensodyne. These products have consistently grown their market share over the years.

Second, there are signs that inflation is falling in its key markets. Inflation in the UK dropped to 7.9% in June while in the US dropped to 3.0%. Lower inflation is a good thing for the company because it lowers its cost of doing business.

Further, Haleon has more room to grow its dividends. The company declared a dividend of 1.8 pence per share for the first half of the year.

Haleon share price forecast

HLN chart by TradingView

Haleon stock price rose to a high of 344.05p in July and then retreated. It dropped below the important support level at 335.90p, the highest point in February. The shares have moved below the 25-period exponential moving average (EMA). The Relative Strength Index (RSI) has moved below the overbought level at 83 to 34. At the same time, the two lines of the MACD have formed a bearish crossover.

Therefore, the short-term outlook for the shares is bearish, with the next level being at 307p, the lowest point on July 7th. In the long-term, however, the stock will rebound, as investors buy the dip.