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On Wednesday, Canaccord Genuity reiterated its Buy rating on Prestige Brands (NYSE:PBH) shares, maintaining a price target of $93.00. The firm's analysts held a fireside chat with Prestige Consumer Healthcare's CEO Ron Lombardi, CFO/COO Chris Sacco, and VP of IR and Treasury Phil Terpolilli, focusing on the company’s strategic financial management and growth initiatives.
During the discussion, Prestige Brands' leadership highlighted the company's capital allocation strategy, which prioritizes reinvestment in the business, mergers and acquisitions (M&A), strategic share repurchases, and further debt reduction. The company concluded its September-ending quarter with a leverage ratio of 2.7 times.
The conversation also touched on Prestige Brands' approach to expanding its niche portfolio, emphasizing the company's robust EBITDA margins, which are in the low-to-mid-30s percentage range, supported by current EBITDA of $356.91 million. The management team underscored their commitment to operational enhancements, capacity expansion, diversification of supplier bases for certain brands, and fostering innovation.
Canaccord Genuity spotlighted Prestige Brands in its 2025 consumer outlook report, suggesting the company is well-positioned to undertake an accretive M&A transaction potentially within the year. The analysts noted that even without an immediate acquisition, Prestige Brands has considerable opportunities to grow using its existing portfolio by improving operations and driving innovation.
In other recent news, Prestige Consumer Healthcare reported a slight dip in Q2 sales, marking a total revenue of $284 million. Despite some hurdles with the Clear Eyes brand due to supply chain issues, the company noted an increase in earnings per share (EPS) to $1.09 and a generated free cash flow of $68 million.
Positive international growth, notably with the Hydralyte brand and Canadian portfolio, helped balance the sales decline. The company also reduced its debt by $40 million, achieving a leverage ratio of 2.7x. Looking ahead, Prestige Consumer Healthcare has projected fiscal year revenues to fall between $1.125 billion and $1.140 billion, with an adjusted EPS forecast of $4.40 to $4.46.
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