On Monday, Mizuho Securities adjusted its outlook on Hain Celestial Group Inc. (NASDAQ:HAIN), a company known for its organic and natural products. The firm lowered the price target to $8.00 from the previous $10.00.
The adjustment follows Hain Celestial's second downward revision of its fiscal year 2024 guidance, citing both internal and external factors. The company's third fiscal quarter highlighted the challenges and uncertainties that often accompany corporate turnaround efforts.
Despite observable advancements in productivity and working capital management, the forecast for net leverage by the end of fiscal year 2025 suggests a "high-3x" figure. This projection, along with anticipated further cash flow improvements, indicates a limited potential for stock appreciation compared to the adjusted EBITDA growth of 8% expected by the market.
Hain Celestial's current trading value is approximately 9 times Mizuho's estimated CY25E EBITDA, which represents roughly a 20% discount when compared to the U.S. Food sector. The firm acknowledges a slightly favorable risk/reward balance for the stock but sees insufficient momentum to warrant a re-rating at this time.
In light of these factors, Mizuho has revised its EBITDA estimates for Hain Celestial downward for both FY24E and FY25E to $153 million and $164 million, respectively, from the previous estimates of $160 million and $169 million. Consequently, the price target has been adjusted to $8.00, based on 9.5 times the firm's projected CY25E EBITDA.
This recalibration reflects the analyst's view of the company's financial prospects and market position.
InvestingPro Insights
As Hain Celestial Group Inc. navigates through its turnaround efforts, recent data from InvestingPro provides a deeper financial perspective. With a market capitalization of $631.6 million, the company's valuation metrics present a mixed picture. The negative P/E ratio of -6.90 signals challenges in profitability, yet the strong free cash flow yield implied by the valuation suggests underlying strength in cash generation capabilities. Moreover, Hain Celestial's gross profit margin stands at 22.17%, reflecting a solid ability to retain earnings from sales after accounting for the cost of goods sold.
InvestingPro Tips highlight that despite a challenging past year with a price decline of over 50%, analysts expect net income growth this year. Additionally, the company's liquid assets surpass its short-term obligations, indicating a robust liquidity position. For investors seeking comprehensive analysis and additional insights, there are 11 more InvestingPro Tips available, which can be explored on the InvestingPro platform. To gain access to these valuable tips and enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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