Hold Rating on Hain Celestial Amid Transition Challenges and Adjusted Price Target

D.A. Davidson analyst Brian Holland has maintained their neutral stance on HAIN stock, giving a Hold rating on May 12.

Brian Holland has given his Hold rating due to a combination of factors surrounding Hain Celestial’s recent performance and future prospects. The third quarter results for Hain fell short of expectations, except for a decrease in operating expenses thanks to reduced benefit accruals. Holland’s concerns, which were initially raised in February, highlight that the company’s transition to focusing on revenue growth is more challenging and time-consuming than initially projected. While Holland notes that Hain Celestial has made some positive steps, such as SKU rationalization and optimizing operations, the decreased financial guidance within the first year of their latest turnaround effort signals ongoing challenges and a lack of short-term visibility.
Holland’s twelve-month price target has been adjusted to $8 from $10, calculated at approximately 9 times the forward EBITDA estimate, reduced to account for execution risks that have been persistent in Hain’s portfolio for over a decade. Holland applies a discount to the average valuation multiples of Hain’s peers, acknowledging that while Hain has historically traded at a premium to its peer group, recent trades show a discount. He also points out that the historical valuation may no longer be as relevant given the significant changes in Hain Celestial’s narrative over the past few years, suggesting that past performance might not be a reliable indicator of future success.

In another report released on May 12, Mizuho Securities also maintained a Hold rating on the stock with a $8.00 price target.

Based on the recent corporate insider activity of 30 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of HAIN in relation to earlier this year.

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Hain Celestial (HAIN) Company Description:

Hain Celestial Group, Inc. engages in the production and distribution of organic and natural products. It operates through the following geographical segments: United States, United Kingdom, Rest of World, and Corporate and Other. The United States segment comprises of baby, pantry, snack food, fresh, personal care, and tea products. The United Kingdom segment offers frozen and chilled products. The Rest of World segment distributes products in Canada and Europe. The Corporate and Other segment includes expenses related to the firm’s administrative functions. The company was founded by Irwin David Simon on May 19, 1993 and is headquartered in Lake Success, NY.