Tuesday, Canaccord Genuity maintained a Buy rating on shares of Prestige Brands (NYSE:PBH) and increased the price target to $86 from $81. The adjustment follows tracked data showing robust consumption for the company's portfolio of niche brands, which suggests a limited risk of customers opting for cheaper alternatives.
Prestige Brands is set to announce its financial results on November 7, before market opening. The firm's new price target reflects confidence in the company's performance, despite anticipating a slight 1.5% dip in sales to $282 million. This forecast aligns with both the company's guidance and consensus estimates, and is largely attributed to challenges faced by the Clear Eyes brand.
The expected downturn in sales is a result of production issues with Clear Eyes, as its third-party manufacturers struggled to ramp up efficiency following routine maintenance and capacity upgrades. Despite this setback, Canaccord Genuity's price target increase suggests that the overall health of Prestige Brands' diverse product range remains strong.
In addition to sales figures, the firm estimates an adjusted earnings per share (EPS) of $1.08, which is consistent with both guidance and Wall Street's expectations. As investors and analysts await the upcoming earnings report, attention will be focused on the company's progress in resolving the Clear Eyes supply issues, as well as performance across different segments and regions, and any revisions to the fiscal year 2024 guidance.
InvestingPro Insights
As Prestige Brands (NYSE:PBH) approaches its November 7 earnings announcement, InvestingPro data provides additional context to Canaccord Genuity's optimistic outlook. The company's P/E ratio of 17.97 suggests a reasonable valuation, especially considering its strong gross profit margin of 56.09% for the last twelve months as of Q1 2023. This robust margin aligns with Canaccord's confidence in the company's portfolio of niche brands.
Despite the anticipated sales dip, PBH's year-to-date price total return of 20.53% indicates investor confidence in the company's long-term prospects. This positive sentiment is further supported by an InvestingPro Tip: PBH has raised its earnings per share for 3 consecutive years, demonstrating consistent financial performance even in the face of challenges like the Clear Eyes production issues.
Another relevant InvestingPro Tip highlights that PBH has maintained dividend payments for 10 consecutive years, suggesting financial stability that could help weather temporary setbacks. These insights, along with 12 additional tips available on InvestingPro, provide a more comprehensive view of Prestige Brands' financial health and market position as it prepares to release its latest earnings report.
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