Haleon among four FTSE 100 stocks attracting attention right now

It’s a busy time for blue-chip results and these companies are under the spotlight. Our City writer explains why and reveals what analysts think the shares are worth.

A FTSE 100 newcomer today stole the limelight in a crowded session of healthcare updates as its latest robust trading figures reinforced several City “buy” recommendations.

Medical products business ConvaTec Group (LSE:CTEC) has held its own since entering the top flight in September, with upgraded 2022 revenues guidance today sending shares up 12.4p to 224.2p to a new two-month high.

The stock is up 17% this year but there are plenty in the City who think there’s further to go, given that it trades at an approximate 20% discount to the multiples of large-cap peers.

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Investec Securities has a price target of 275p, viewing ConvaTec as an “attractive investment”.

It highlights the appeal of ConvaTec’s cash flow generation, strong market positions in core product segments, solid defensive attributes and an innovation-led upside.

The company is due to hold a capital markets event next week that will reiterate the improving momentum and showcase the next phase of delivery.

In today’s update, ConvaTec said revenues were 6.3% higher on an underlying basis in the first 10 months of the year. Its performance benefited from a strong result in the advanced wound care division, plus a low single-digit revenues improvement in ostomy care.

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Numis, which has a price target of 300p, said a portfolio of technologies for chronic life-long conditions and lower exposure to hospital staffing issues and elective backlogs made ConvaTec an attractive medtech holding in the current environment.

UBS, which is at 275p, reckons a multiple in line with peers is more than justifiable given that the company “offers better growth and is starting to build a track record of delivery”.

Challenges for Haleon

Sensodyne consumer healthcare business Haleon (LSE:HLN) is still finding its feet in the FTSE 100 index after a bruising spell of trading since splitting from GSK (LSE:GSK) with a share price of 330p.

Worries over the potential for consumers to trade down to other brands have been accompanied by ongoing uncertainty over potential exposure to US litigation relating to heartburn drug Zantac.

Haleon has said it is not a party to any Zantac claims, adding in September that it has rejected requests from former partners Pfizer and GSK for indemnification.

The issue has clouded the investment case, however, with shares back at 275p this afternoon after a topsy-turvy session on the back of a robust third-quarter update.

The stock was initially in positive territory after Haleon reported organic sales growth of 8.1%, up from 7.5% in the second quarter and well ahead of consensus expectations of 4.7%.

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The growth was well balanced as volume and sales mix contributed 2.6 percentage points and pricing produced the rest. The performance, which has been helped by a strong cold and flu season, means Haleon now expects revenues growth for the year of between 8% and 8.5% and a slight improvement in adjusted operating margin.

Chief executive Brian McNamara said: “Overall Haleon is demonstrating its strength in a challenging market environment.”

UBS backed Haleon with a 400p price target and noted a valuation of 14 times 2023 forecast earnings is an approximate 30% discount to European food and healthcare peers.

Reason not to go off Grid

Among other FTSE 100 companies reporting today, National Grid (LSE:NG.) shares edged up 7p to 993.8p after its half-year results included a small beat on underlying earnings.

Its operating profit rose 50% to £2.1 billion, as a stronger performance in electricity distribution and the benefit of recent property sales to Berkeley Group (LSE:BKG) helped offset higher debt interest costs.

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The company upgraded its 2022-23 guidance, but most of this improvement was due to exchange rate movements that UBS said had already been factored in. However, the bank believes upgrades to medium-term guidance for asset growth of between 8% and 10% a year should be positive for the shares.

Shares stuck in reverse

Elsewhere in the FTSE 100, Auto Trader Group (LSE:AUTO) slipped 15.8p to 538.2p despite a resilient set of half-year results that showed a 2% drop in operating profit to £149.1 million.

The shares are down by 25% so far in 2022, with the near-term outlook for the car market continuing to be impacted by supply chain issues. Peel Hunt, however, sees the potential for a recovery to 650p: “In the medium term, we believe there is a huge opportunity as it starts to monetise its digital retailing innovations.”