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On Wednesday, Bernstein, a research firm, maintained its Outperform rating on Hain Celestial (NASDAQ:HAIN) stock with a steady price target of $12.00. The company's recent performance has been marked by continued sales challenges.
The latest quarter showed a decline in reported sales by 4%, a slight decrease from the 3.7% drop in the previous quarter. This downturn is attributed to a combination of factors including SKU rationalizations and a generally weak U.S. Food backdrop.
Hain Celestial's management has been strategically reducing unprofitable stock-keeping units (SKUs) within its Personal Care business, a move that is expected to negatively impact sales in North America throughout the first half of the fiscal year 2025.
The effect of this SKU rationalization is estimated to potentially reduce sales by approximately 3% in FY25. Consequently, the overall net sales guidance for the company is anticipated to lean towards a low single-digit (LSD) decline for FY25.
Additionally, the Baby & Kids segment of Hain Celestial's business experienced a significant downturn, with sales dropping by 10% in the fourth quarter. This decline was largely due to ongoing supply chain issues affecting organic baby formula.
Bernstein's analysis suggests that this negative trend will likely resolve by the second half of FY25. Excluding the impact of the supply chain problems, the Baby & Kids segment would have seen a slight increase in sales.
Bernstein's commentary indicates that while Hain Celestial faces several headwinds, the firm anticipates a recovery in the latter half of FY25, particularly in the Baby & Kids segment, as supply chain issues are expected to fully abate. The current Outperform rating and $12.00 price target reflect Bernstein's outlook on the company's potential to navigate through these challenges.
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