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On Tuesday, Jefferies analyst Kaumil Gajrawala adjusted the price target for Hain Celestial (NASDAQ:HAIN) shares, reducing it to $4.50 from the previous $7.55. The new target comes as the stock, currently trading at $4.19, has declined 31.87% year-to-date. Despite the change in the price target, the analyst has decided to maintain a Hold rating on the company’s stock. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics.
Gajrawala’s assessment reflects a cautious stance on Hain Celestial’s future financial performance. The company, with current annual revenue of $1.71 billion and EBITDA of $135 million, has laid out a four-pillar strategy that is expected to yield over 3% organic growth, improve margins significantly, and enhance cash flow by fiscal year 2027. However, the realization of these goals is contingent on the successful implementation of efficiency measures that would free up cash to be reinvested back into the business. InvestingPro data shows strong liquidity with a current ratio of 2.01, indicating the company has ample resources for its transformation.
The timeline for these positive changes to manifest in the profit and loss statement is anticipated to be later in the current fiscal year 2025. This delay in potential benefits has led to Jefferies maintaining a neutral position on the stock for the time being.
The new price target of $4.50 set by Jefferies is based on an 8x multiple of the firm’s fiscal year 2027 earnings per share estimate of $0.56. This valuation marks a significant discount when compared to Hain Celestial’s five-year average price-to-earnings ratio of 17x. Currently, Hain Celestial’s stock is trading at 6x fiscal year 2027 estimates, which is considerably lower than the historical average, indicating a more conservative market valuation of the company’s earnings potential.
Investors and market watchers will be keeping a close eye on Hain Celestial’s progress towards achieving its strategic goals and the subsequent impact on its financial results as projected by the company and analyzed by Jefferies.
In other recent news, Hain Celestial has been in the spotlight due to a series of developments. The company reported disappointing Q2 results, with earnings and revenue falling short of Wall Street expectations. Hain Celestial reported a Q2 EPS of $0.08, which was $0.04 below the analyst estimate, and revenue came in at $411 million, missing the consensus estimate of $432.49 million. Jefferies analyst Kaumil Gajrawala reiterated a Hold rating on the company, attributing the underperformance to execution and operational issues.
In addition to financial performance, Hain Celestial has made strategic moves to enhance its supply chain. The company is set to open a new distribution center in Savannah, Georgia, effectively doubling its distribution capacity. This expansion is part of the company’s effort to deliver products more quickly and efficiently to U.S. customers.
Analysts from different firms have also weighed in on the company’s prospects. Jefferies maintained a Hold rating on Hain Celestial’s stock with a $7.55 target, while Piper Sandler cut its stock price target to $7.00 from the previous $8.00, keeping a Neutral stance. These recent developments shed light on Hain Celestial’s current financial performance and strategic initiatives.
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