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On Monday, TD Cowen raised the price target for The Beauty Health Company (NASDAQ: SKIN) shares to $2.00 from the previous $1.50 while maintaining a Hold rating on the stock. The company, which InvestingPro data shows has posted an impressive 76% return over the past week, reported first-quarter sales outperforming expectations with a 15% decline compared to the anticipated 22% drop. With a robust gross profit margin of 56.6%, the company’s adjusted EBITDA stood at $7.3 million, surpassing the Street’s projection of a $5.5 million loss.
Despite the better-than-expected first-quarter performance, Chen pointed out that management has adopted a cautious stance for the rest of the fiscal year 2025 due to macroeconomic concerns, leading to lowered forecasts. According to InvestingPro analysis, which offers 12 additional key insights for subscribers, the company maintains strong liquidity with a current ratio of 7.47, though analysts anticipate a continued sales decline this year. Chen suggests that the updated fiscal year 2025 guidance might be on the conservative side.
The report highlighted that while Asia-Pacific market conditions and tariffs continue to pose significant challenges, there are positive developments in the company’s innovation, loyalty programs, and supply chain improvements. The analyst is closely watching the company’s strategic moves, including the introduction of a hydrophilic booster in the second half of 2025, the launch of new skincare products next year, and the implementation of a new loyalty program.
The revised price target of $2.00 is based on approximately 1.5 times the fiscal year 2 expected enterprise value to sales ratio. Chen’s commentary reflects a cautious but observant stance on The Beauty Health Company’s potential for growth amid ongoing initiatives and product launches.
In other recent news, Beauty Health Co reported its Q1 2025 earnings, showcasing a revenue of $69.6 million, which exceeded the forecast of $63.78 million. The company’s revenue growth was driven by an 8.2% increase in consumable sales and a rise in active devices to 35,014 units. Despite this positive revenue performance, the company faces challenges, including a downward revision in EPS forecasts and expectations of negative earnings in upcoming quarters. Additionally, Beauty Health Co has announced strategic initiatives and upcoming product launches to strengthen its market position.
The company holds a dominant market share of over 60% in the U.S. for minimally invasive skin health treatments. Analyst firms like TD Cowen have shown interest in the company’s strategies to mitigate macroeconomic pressures and tariff impacts, which are expected to cost an additional $5 million in the latter half of 2025. Beauty Health Co’s full-year 2025 sales are projected to be between $270 million and $300 million, with adjusted EBITDA ranging from $15 million to $25 million. The company is transitioning its China distribution to a third-party model to address operational challenges and reduce exposure to tariffs.
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