Energizer Holdings: Hold Rating Justified Amidst Modest Sales Growth and Financial Improvements

Canaccord Genuity analyst Brian McNamara maintained a Hold rating on Energizer Holdings (ENR – Research Report) yesterday and set a price target of $32.00.

Brian McNamara has given his Hold rating due to a combination of factors including Energizer Holdings’ recent performance and projected future developments. Energizer’s Q2 results delivered sales that met expectations, with profitability surpassing predictions, which is a positive sign. The company experienced a commendable uptick in adjusted gross profit and EBITDA, beating consensus estimates. This was largely due to improved category trends and cost-saving initiatives from Project Momentum. Despite this, the company’s forecast for organic sales growth remains modest and on the lower end of previous predictions, suggesting potential concerns about the robustness of future sales growth.

Furthermore, Energizer’s focus on improving gross margins, cash flow, and reducing debt amidst economic uncertainty is noteworthy. They have made significant strides in these areas, particularly with the reduction of debt and expansion of gross margins in the first half of 2024. However, the rate of organic revenue growth and volume decline in battery sales, despite recent improvements, may still pose challenges. The company’s performance in the battery category is strong, with market share gains, but the overall decline in battery sales signals an area that requires attention. These mixed signals—strength in brand performance and market share, against overall category declines and conservative revenue growth—justify McNamara’s Hold rating and the slight reduction in the price target.

According to TipRanks, McNamara is a 2-star analyst with an average return of 0.7% and a 50.00% success rate. McNamara covers the Consumer Cyclical sector, focusing on stocks such as Driven Brands Holdings, Solo Brands Inc Class A, and SharkNinja, Inc..

In another report released today, RBC Capital also maintained a Hold rating on the stock with a $38.00 price target.

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Energizer Holdings (ENR) Company Description:

Energizer Holdings, Inc. manufacturers and markets batteries and lighting products. It also designs and manufactures automotive fragrance and appearance products. The firm’s brands include Bahama & Co, Bahama & Co, Eagle One, Nu Finish and STP. The company’s products include household batteries, specialty batteries, and portable lighting. Energizer Holdings was founded in 2000 and is headquartered in St. Louis, MO.