MS names European staples top picks ahead of challenging 2026

HALEON

15/12/2025 13:27

** Morgan Stanley expects a difficult 2026 for European consumer staples, although the second half will offer easier year-ago comparisons for some companies

** Staples volumes remain under pressure due to elevated inflation in the consumer basket, the broker says

** MS prefers household and personal care (HPC) and tobacco over beverages and food, as the latter two face structural and commodity price pressures

** MS chooses Haleon HLN.L, AB InBev ABI.BR and Danone DANO.PA (all "overweight") as its top picks in HPC, beverages and food, respectively

** Haleon looks set for organic sales growth acceleration in 2026, MS says

** It says investors underestimate AB InBev's potential to generate cash that can be returned through share buybacks, dividends and early debt redemption

** The broker also likes the 2026 setup for Danone, expecting above-sector organic sales growth to support its share outperformance

** MS cuts Reckitt Benckiser RKT.L and Barry Callebaut BARN.S to "equal weight" from "overweight", citing their balanced risk-reward profiles

** It resumes Unilever ULVR.L with "overweight", pointing to portfolio focus after Magnum MICCT.AS spin-off, health/ageing trends, and structural growth prospects

(Reporting by Amir Orusov)

((Amir.orusov@thomsonreuters.com))