S&P 500 may face selling pressure as systematic funds reach full exposure
On Wednesday, DA Davidson reaffirmed their positive stance on Waldencast Acquisition Corp. (NASDAQ: WALD), maintaining a Buy rating and a $7.50 price target. The company recently reported its fourth-quarter sales for the year 2024, showcasing a significant 31% increase. Earnings before interest, taxes, depreciation, and amortization (EBITDA) also saw a notable year-over-year rise, reaching $11.2 million, which surpassed DA Davidson’s prediction of $10.7 million but fell short of the broader market expectation of $12.3 million. According to InvestingPro data, the company maintains impressive gross profit margins of 69.71% and shows strong liquidity with a current ratio of 1.47, indicating solid operational efficiency despite current market challenges.
Waldencast’s expansion into over 600 Ulta Beauty (NASDAQ:ULTA) stores was announced, marking the brand’s first venture outside of Sephora stores in the United States. This move is set to occur in the spring and is part of the company’s strategy to enhance its retail presence. Despite this expansion, Waldencast has projected only a mid-teens sales growth for the year 2025, with flat growth in the first quarter partly due to the launch of big jelly tints in the first quarter of 2024. Consequently, DA Davidson has adjusted its 2025 sales growth estimate for Waldencast to 14% year-over-year, a decrease from the previously anticipated 20%. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which covers what really matters for informed investment decisions.
The financial firm also anticipates potential for a higher EBITDA margin than their current 2025 estimate of 16%, as Waldencast has guided towards a mid- to high-teens margin. DA Davidson’s price target of $7.50 is based on a 21 times multiple of their projected 2026 EBITDA of $63 million. This valuation reflects the firm’s confidence in Waldencast’s growth trajectory and profitability outlook. Trading at $3.40, significantly below its 52-week high of $7.54, the stock has shown a tendency to move counter to market trends with a beta of -0.64, as revealed by InvestingPro data.
In other recent news, Waldencast Acquisition Corp reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of -$0.06, which slightly missed analysts’ expectations of -$0.0524. However, the company’s revenue for the quarter was $72.08 million, surpassing the forecast of $70.77 million. Waldencast demonstrated strong annual growth with a 27.5% increase in full-year net revenue, reaching $273.9 million. The company also reported an adjusted gross profit of $203.6 million, marking a 35.3% year-over-year increase. Additionally, Waldencast secured a new $175 million credit facility to support future growth. Despite these financial achievements, the company’s stock experienced a decline following the earnings announcement. The outlook for 2025 includes expectations of mid-teens net revenue growth and adjusted EBITDA margin expansion to the mid-to-high teens. Analysts from Canaccord Genuity and TD Cowen engaged with Waldencast’s management, addressing the company’s resilience and strategic growth initiatives, particularly the expansion into Ulta Beauty locations.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.