Canaccord cuts Edgewell stock target to $35, maintains buy

On Thursday, Canaccord Genuity adjusted its outlook on Edgewell Personal Care (NYSE:EPC) shares by reducing the price target to $35 from the previous $40, while still recommending the stock as a Buy. The firm’s analysis follows Edgewell’s second-quarter report, which indicated a 3.1% decline in sales, falling short of both Canaccord’s and Wall Street’s expectations. According to InvestingPro data, the company’s stock is currently trading at a P/E ratio of 17.45x, with year-to-date returns down 19.22%. InvestingPro analysis suggests the stock may be undervalued at current levels. The company’s organic sales decreased by 1.5%, with international segments achieving a 3% organic growth, contrasting with a 4% downturn in North America.

Edgewell’s management has revised their annual guidance and earnings projections downward, citing the second quarter’s underperformance and a range of challenges including additional tariff pressures, the need for increased promotional investment, and higher advertising and promotion (A&P) costs. Despite these headwinds, management anticipates a sales rebound in the second half of 2025, after a challenging first half.

The company’s stock experienced a significant drop, plunging as much as during the day of the earnings report, but ultimately closing with a 10% loss. Canaccord’s analyst believes the market’s reaction was excessive and points out several factors that could contribute to a sales upswing in the latter half of the year. These factors include more favorable year-over-year comparisons, resolution of previous supply chain issues, a potential boost in sun care sales in the third quarter, normalization in feminine care, continued strong international performance, and opportunities for Edgewell to implement price increases.

However, the ongoing tariff situation presents an additional obstacle for Edgewell’s recovery in the North American market, leading to higher costs and consumer uncertainty. In light of these challenges and the latest financial results, Canaccord has revised its price target for Edgewell but maintains a positive outlook on the company’s potential for a sales turnaround and margin improvements in the second half of 2025. With annual revenue of $2.24 billion and a gross profit margin of 43%, the company maintains a solid financial foundation. Discover more detailed analysis and exclusive insights about Edgewell’s recovery potential through InvestingPro’s comprehensive research tools and expert analysis.

In other recent news, Edgewell Personal Care Co. reported its second-quarter 2025 earnings, which fell short of analyst expectations for both earnings and revenue. The company posted an adjusted earnings per share (EPS) of $0.87, missing the anticipated $0.90, while revenue was reported at $580.7 million, below the forecasted $591.01 million. International sales for Edgewell grew by 3%, marking the 12th growth quarter in 13, although North American sales declined by 4%. Despite these challenges, the company improved its adjusted gross margin by 100 basis points and reported an adjusted EBITDA of $99.3 million.

In terms of future guidance, Edgewell projects full-year organic sales growth to be flat to 1%, with a Q3 net sales increase of 1% and a 2% rise anticipated in the second half of the year. The company also forecasts adjusted EPS for the full year between $2.85 and $3.05 and adjusted EBITDA between $329 million and $341 million. Analysts from Barclays (LON:BARC) and UBS inquired about the impact of tariffs and the company’s confidence in its second-half growth outlook, with Edgewell estimating the tariff impact at $3-4 million for the year. The company is exploring various measures to mitigate these effects, including pricing and productivity initiatives.

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