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On Wednesday, Stifel, a financial services firm, adjusted its outlook on Hain Celestial (NASDAQ:HAIN) stock, increasing the price target to $9.00 from the previous $8.00. The firm sustained its Hold rating on the stock, following the company's disclosure of its fourth-quarter earnings.
Hain Celestial's recent financial report revealed a slight dip in organic sales growth, although the company exhibited a robust profit performance, bolstered by productivity savings.
Despite the softer sales, Hain Celestial confirmed its medium-term financial objectives, which include a substantial gross margin increase of 400-500 basis points, an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin exceeding 12%, and a 3% organic sales growth extending through the fiscal year 2027.
The company has recalibrated its organic sales figures to account for divestitures and business exits, a move that Stifel notes has significantly heightened confidence in Hain Celestial's ability to meet its revenue projections.
The firm anticipates that organic sales growth will commence in the second half of fiscal year 2025, propelled by distribution improvements in the Snacks segment and a recovery in the Formula business.
Hain Celestial has provided initial guidance for fiscal year 2025, forecasting at least stable organic sales growth and a mid-single digit uptick in EBITDA.
Stifel has revised its organic sales growth estimate to a modest increase of 0.5%, while maintaining its EBITDA projection at $164 million, indicating a 6% growth. This EBITDA forecast is now expected to be more heavily weighted towards the latter half of the year, in line with the anticipated timing of sales growth.
InvestingPro Insights
In light of Stifel's updated outlook on Hain Celestial, it's worth considering some key metrics and insights from InvestingPro. The company's market capitalization currently stands at approximately $727.74 million, reflecting the scale of the business in the competitive market landscape. Despite a challenging period, Hain Celestial has shown a significant return over the last week, with a 26.96% price total return, which may indicate investor optimism in the company's turnaround strategies.
InvestingPro Tips highlight that Hain Celestial's net income is expected to grow this year, which aligns with Stifel's forecast of a mid-single digit uptick in EBITDA. Additionally, Hain Celestial's valuation implies a strong free cash flow yield, a reassuring sign for investors looking for companies with the potential for healthy cash generation. It's also worth noting that the company's liquid assets exceed its short-term obligations, providing financial flexibility in the near term.
For readers interested in a deeper analysis, InvestingPro offers additional tips on Hain Celestial, which can be found at https://www.investing.com/pro/HAIN. These insights could prove invaluable for those looking to make informed investment decisions regarding the company's stock.
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