On Monday, CFRA announced a revision of the stock price target for Hain Celestial Group Inc (NASDAQ:HAIN), reducing it to $8.50 from the previous $12.00, while keeping a Hold rating on the stock. The adjustment comes as the company faces challenges in sales growth and carries a significant debt burden.
The new 12-month price target is based on an enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of 8.5x, applied to the firm's forecasted EBITDA of $175 million for the fiscal year ending in June 2025.
CFRA also revised its earnings per share (EPS) estimates, lowering the fiscal year 2024 EPS to $0.32 from $0.34 and fiscal year 2025 EPS to $0.52 from $0.53.
Hain Celestial's performance has been notably weak this year, with its shares declining approximately 31% year-to-date. The company's struggle to increase sales, coupled with a high leverage ratio of 4.2x as per the credit agreement as of the second fiscal quarter of 2024, has contributed to the underperformance.
Moreover, the company has adjusted its full-year guidance downward during the second fiscal quarter of 2024 due to slower than anticipated growth and the ongoing process of phasing out lower-margin products.
Despite expectations for the third fiscal quarter of 2024 to mark a turning point with sequential improvements in organic sales growth and adjusted EBITDA, CFRA suggests that Hain Celestial still has considerable progress to make before achieving stable and sustainable growth.
CFRA also indicated the possibility of a further revision to Hain Celestial's fiscal year 2024 outlook when third-quarter results are released, especially considering the potential need to boost reinvestment in advertising to support product units and volumes.
InvestingPro Insights
As Hain Celestial Group Inc (NASDAQ:HAIN) navigates through its current challenges, the latest data from InvestingPro sheds light on some critical aspects of the company's financial health and market performance. With a market capitalization of $675.54 million, Hain Celestial's valuation reflects a negative P/E ratio of -4.25, signaling investor concerns about profitability.
Still, the adjusted P/E ratio for the last twelve months as of Q2 2024 stands at 51.36, indicating expectations of future earnings. A noteworthy InvestingPro Tip highlights that analysts expect net income to grow this year, which may provide some optimism amidst the price target revision by CFRA.
Moreover, the company's stock has experienced significant volatility, with a 1-year price total return of -54.17%, trading near its 52-week low. This aligns with CFRA's observation of the stock's underperformance this year. Another InvestingPro Tip suggests that despite recent struggles, Hain Celestial's liquid assets exceed its short-term obligations, which could be a sign of financial stability in meeting immediate liabilities.
For investors looking to delve deeper into Hain Celestial's potential, InvestingPro offers additional insights. There are currently 8 more InvestingPro Tips available, which can be accessed for a comprehensive analysis of the company's prospects. To benefit from these valuable insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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