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Investing.com - Telsey Advisory Group lowered its price target on Waldencast Acquisition Corp. (NASDAQ:WALD) to $3.00 from $4.00 on Wednesday, while maintaining an Outperform rating on the stock. The company’s shares currently trade at $1.80, having declined over 43% in the past six months. According to InvestingPro analysis, the stock appears undervalued at current levels.
The firm cited ongoing out-of-stock issues at both Waldencast brands, softening international consumption, retailer destocking at Milk, and the exiting of non-core distribution points at Obagi as factors behind the reduced target. Despite these challenges, the company maintains impressive gross profit margins of 70%, though it operates with a significant debt burden.
Telsey noted that Waldencast plans to deploy incremental brand-building investments for Milk in international markets during the second half of 2025, while Obagi’s supply chain restructuring is expected to deliver further improvements in the same period and beyond.
The research firm highlighted that Waldencast has begun a review of strategic alternatives, which could potentially improve the company’s capital structure and generate shareholder value given its portfolio of "strong, profitable brands."
Telsey’s new $3 price target assumes a 12.5x multiple on its two-year forward EBITDA estimate of $45 million, compared to the one-year next-twelve-months average of 11.6x and the three-year average of 13.8x.
In other recent news, Waldencast Acquisition Corp. postponed its full second-quarter earnings release and announced a strategic review of its operations. The company delayed both the financial report and the earnings call initially set for early this week. Waldencast also adjusted its 2025 outlook, indicating a potential decline in performance for the latter half of the year. In a strategic move, Waldencast acquired Novaestiq Corp. and the U.S. rights to the Saypha line of hyaluronic acid injectable gels. This acquisition expands Waldencast’s Obagi Medical (TASE:BLWV) brand into the injectable aesthetics market, alongside its existing skincare offerings. The acquisition positions Obagi Medical to compete in both the U.S. medical-grade skincare and dermal filler markets, which are projected to grow significantly by 2029. Raymond (NSE:RYMD) James reiterated a Market Perform rating for Waldencast, reflecting a neutral stance on the company’s stock. These developments mark significant changes in Waldencast’s operational strategy and market positioning.
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