Broker tips: Haleon, NatWest

(Sharecast News) - Analysts at Berenberg downgraded Haleon from 'buy' to 'hold' on Monday after another weak topline performance and reduced growth visibility.

Berenberg, which also cut its price target on the stock to 365p from 514p, said Haleon's thirdquarter update delivered "another disappointing print", with a mix of companyspecific issues and seasonal drags prompting a fresh guidance cut.

While investments in organisational agility were beginning to show results, cost savings continued to support operating profit growth and free cash flow remained strong, Berenberg said inconsistent revenue delivery had eroded confidence in Haleon's ability to reach the upper end of its 4% to 6% mediumterm organicgrowth algorithm.

Organic sales rose 2.6% in Q3, below the 3.4% consensus, with volume up just 0.5%. AsiaPacific growth of 3.9% missed expectations for 6.3%, partly due to the halt in OTC Centrum sellin to China following a raw material reclassification - a 50bp drag expected to repeat in Q4. North America grew 2.5%, held back by weaker coldandflu ordering and softer consumer demand, while Europe declined 0.6% as pricing failed to offset a 2.7% volume/mix drop. International grew 6.9%, ahead of forecasts.

Haleon now expects roughly 2.5% organic sales growth for FY26, down from 3% to 5%, though it still anticipates highsingledigit adjusted operating profit growth.

Berenberg cut its nearterm estimates, lowered mediumterm growth assumptions to the bottom of its algorithm range and reduced buyback expectations, citing higher execution risk.

Shore Capital has reiterated a 'hold' rating on NatWest Group and trimmed its target price, highlighting the bank's recent "concerning" guidance for flat net interest margins, which led to a sell-off in the stock on Friday.

NatWest's shares dropped after the company delivered third-quarter results in line with expectations, but guided to NIM to remain broadly stable through FY27F. NIM rose to 2.50% in the quarter, up from 2.37% the year before, though chief financial officer Katie Murray revealed on an analyst call that the measure would remain "flatter" next year. The market had pencilled in a figure of 2.62% for 2027.

Shore Capital warned that NatWest's expected £1bn-plus structural hedge income boost next year could be partly offset by intensifying competition for deposits and lending, prompting the broker to lower its NIM forecasts and predict weaker net interest income than current market expectations.

The broker acknowledged that strong growth in average interest-earning assets, supported by increased corporate lending, should partly mitigate the impact of lower NIM. Meanwhile, the bank's capital flexibility has improved with CET1 requirements easing.

"When we published following the interims on 3 August, we argued that the shares looked fully valued; they have since fallen 17%, vindicating our caution. We now think the reaction to the NIM outlook is somewhat overdone, particularly given the AIEA growth and capital offsets," Shore Capital said.

However, with 11% upside to its new target price of 645p, down from 650p previously, the broker said it "would prefer to see a greater margin of upside before turning more positive [on the stock]".