DA Davidson lifts Prestige Brands stock target to $104

On Friday, DA Davidson analyst Linda Bolton Weiser adjusted the price target for Prestige Brands (NYSE:PBH), elevating it to $104 from the previous $95, while maintaining a Buy rating on the stock. The revision follows Prestige Brands’ announcement of third-quarter sales and earnings per share (EPS) that exceeded expectations, prompting the company to increase its full-year 2025 EPS guidance to approximately $4.50, up from the prior forecast of $4.40-$4.46. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period, with the company maintaining a strong gross profit margin of 56%.

The company’s stock responded positively to the news, closing the day with a significant 15% gain. This performance was bolstered by a year-over-year increase in Summer’s Eve sales and a sequential rise in Clear Eyes shipments. Looking forward, Presitge Brands plans to expand its supplier base for Clear Eyes in the second half of fiscal year 2026. InvestingPro analysis indicates the stock is trading near its 52-week high of $87.39, with impressive returns of 29% over the past six months. The company’s financial health is rated as "GREAT" by InvestingPro, supported by a strong current ratio of 3.68, indicating robust liquidity.

DA Davidson’s continued optimism for the fourth quarter of fiscal year 2025 is based on the expectation of a 5% year-over-year sales growth, compared to a previous year that saw supply disruptions for Clear Eyes. The firm’s valuation model has been updated, reflecting an increase in the free cash flow growth rate to 3% from 1% for the fiscal years 2028 to 2031, and a higher risk-free rate adjustment to 4.5% from 4.1%. Based on current market data and InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value. Investors seeking deeper insights can access the comprehensive Pro Research Report, which provides detailed analysis of PBH along with 1,400+ other US stocks.

The analyst’s comments provide further insight into the rationale behind the price target adjustment: "We are rolling forward our DCF valuation model, raising the free cash flow growth rate to +3% from +1% in FY28-FY31, and raising the risk-free rate to 4.5% from 4.1%. Net-net, the DCF valuation resulted in intrinsic value, and a PT, of $104 vs. $95 previously."

The revised guidance and the analyst’s price target increase reflect a positive outlook for Prestige Brands as it moves forward with its business strategy and aims to build upon its current momentum in the market.

In other recent news, Prestige Consumer Healthcare revealed mixed Q2 results, with a slight dip in sales down to $284 million, yet an increase in earnings per share (EPS) to $1.09. The company also generated $68 million in free cash flow. Despite supply chain issues affecting the Clear Eyes brand, international growth, particularly with the Hydralyte brand and the Canadian portfolio, helped to counterbalance the decline.

The company’s management also discussed its capital allocation strategy during a fireside chat with Canaccord Genuity analysts. They emphasized reinvestment in the business, potential mergers and acquisitions (M&A), strategic share repurchases, and further debt reduction. Prestige Brands’ EBITDA margins were highlighted as robust, sitting in the low-to-mid-30s percentage range.

Canaccord Genuity maintained its Buy rating on Prestige Brands, keeping a price target of $93.00. The firm also spotlighted Prestige Brands in its 2025 consumer outlook report, suggesting the company is well-positioned for an accretive M&A transaction potentially within the year. These are among the recent developments for Prestige Consumer Healthcare.

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