Canaccord cuts Edgewell stock target to $40, maintains Buy rating

On Tuesday, Canaccord Genuity adjusted its outlook on Edgewell Personal Care (NYSE:EPC) shares, reducing the price target to $40 from the previous $53, while continuing to endorse the stock with a Buy rating. The firm’s analyst cited a combination of factors including currency headwinds and underperformance in certain product categories as reasons for the adjustment. According to InvestingPro data, the stock has fallen over 9% in the past week and appears oversold based on technical indicators. With analyst targets ranging from $30 to $43, and the stock trading at $28.60, InvestingPro analysis suggests the company is currently undervalued.

Edgewell Personal Care unveiled its first-quarter results for 2025, revealing a 2.1% decline in reported sales, which fell short of both Canaccord’s and the wider market’s expectations. Organic sales dipped by 1.3%, influenced by approximately $4 million in currency-related setbacks. Despite these challenges, management emphasized the company’s international growth and the positive trajectory of its Right to Win (RTW) businesses. The company maintains a solid financial position with a current ratio of 1.66, indicating strong liquidity. InvestingPro subscribers have access to over 10 additional key insights about EPC’s financial health and growth prospects.

The company’s adjusted gross margin contracted by 69 basis points, a smaller decline than the market’s anticipated 103 basis points. This was partly due to significant productivity savings, which however, were negated by the impact of currency fluctuations. On a constant currency basis, gross margins actually improved by approximately 80 basis points. Nevertheless, adjusted operating margin fell by 166 basis points, slightly more than market predictions.

Edgewell’s adjusted EBITDA came in at $45.9 million, just below the consensus estimate of $46.8 million, and adjusted earnings per share (EPS) of $0.07 missed the expected $0.12. The company’s management pointed to currency issues as a major obstacle, revising its full-year 2025 guidance to reflect a 230 basis point swing from a previously anticipated benefit to a significant headwind.

Despite the current headwinds, including the ongoing softness in the North American Wet Shave and Feminine Care sectors, Edgewell’s organic sales forecast remains positive, with expectations of a 1-3% increase for the fiscal year 2025. The strength within the RTW portfolio is expected to offset weaker areas. Canaccord Genuity believes that Edgewell’s management is effectively pursuing key long-term objectives, such as operational improvements and brand development within the RTW portfolio. However, the near-term challenges of currency headwinds and the Feminine Care business’s underperformance have necessitated the lowering of the price target. Trading at an EV/EBITDA multiple of 7.9x and maintaining a healthy Altman Z-Score of 3.89, the company shows fundamental strength despite recent challenges. For a comprehensive analysis of EPC’s valuation and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro.

In other recent news, Edgewell Personal Care Company reported its first-quarter earnings, which fell short of analyst expectations. The company reported adjusted earnings per share of $0.07, missing the consensus of $0.12, and revenue of $478.4 million, below estimates of $483.18 million. The company attributed the results to currency headwinds and lower volumes, which had a $0.17 negative impact on EPS.

For the fiscal year 2025, Edgewell now anticipates its adjusted EPS to be towards the lower end of its previously provided range of $3.15 to $3.35 due to increased anticipated negative foreign currency effects. This outlook compares to the analyst consensus of $3.18. The firm maintained its organic net sales growth forecast of 1% to 3% for fiscal 2025 but now expects currency to negatively impact reported net sales by 160 basis points.

Edgewell ended the quarter with $176 million in cash and returned $38 million to shareholders through share repurchases and dividends. The board declared a quarterly dividend of $0.15 per share. Truist analyst Bill Chapell commented on the situation, highlighting the impact of foreign exchange headwinds and declining volumes in North America on the company’s performance.

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