CFRA, a notable financial research firm, increased its price target for Hain Celestial (NASDAQ:HAIN) shares, traded on NASDAQ:HAIN, from $8.00 to $10.00, while maintaining a Hold rating on the stock. This adjustment comes after a detailed analysis of the company's financial outlook and recent performance.
The new price target is based on a revised 9.0x EV/EBITDA multiple, up from the previously used 8.5x, applied to the firm's forecasted adjusted EBITDA of $163 million for the fiscal year ending in June 2025, which is an increase from the earlier estimate of $156 million. The long-term average for the industry stands at a 14x multiple.
CFRA also raised its earnings per share (EPS) estimate for fiscal year 2025 to $0.48, up from $0.42, and initiated a forecast for fiscal year 2026 at $0.58. The company's fourth-quarter adjusted EPS, which came in at $0.13, reflected an 18% year-over-year increase and surpassed expectations by $0.05. Meanwhile, revenues saw a 6.5% year-over-year decline but aligned with projections.
Hain Celestial's fiscal year 2025 guidance has been positively received, with the company predicting flat or better organic sales growth, mid-single-digit growth in adjusted EBITDA, and over $60 million in free cash flow. The firm has also reported a reduction in leverage from 4.3x a year ago to 3.7x in the fourth quarter, with a goal to bring it down to the mid- to high-3x range by the end of fiscal year 2025.
Investors responded favorably to the company's promising outlook and stronger balance sheet, leading to a surge in Hain Celestial's stock price on Tuesday morning. However, CFRA advises caution, noting that the company's guidance is weighted towards the latter part of the fiscal year and that Hain Celestial has previously revised its outlook downward.
Despite these concerns, CFRA acknowledges the company's solid recent results and expresses optimism that Hain Celestial will achieve its fiscal year 2027 targets, which include gross margins of over 26% and EBITDA margins exceeding 12%.
In other recent news, Hain Celestial Group reported robust fourth-quarter earnings, exceeding analyst expectations. The health food company posted an adjusted earnings per share of $0.13, surpassing the estimated $0.08. Revenue for the quarter was approximately $419 million, aligning with the anticipated $419.23 million.
CEO Wendy Davidson noted that fiscal 2024 marked a foundational year for their Hain Reimagined strategy, which has made considerable strides in streamlining the business and fueling growth. Looking forward, Hain Celestial forecasts organic net sales growth to be flat or show improvement in fiscal 2025. The company also projects adjusted EBITDA to increase by mid-single digits and gross margin to rise by at least 125 basis points.
InvestingPro Insights
Following CFRA's updated price target for Hain Celestial, current metrics from InvestingPro offer additional context for investors considering NASDAQ:HAIN. The company's market capitalization stands at approximately $753.79 million, reflecting its relative size within the industry. Despite a challenging period, Hain Celestial has shown a significant return over the last week, with a price total return of 9.63%, signaling potential investor confidence in its short-term prospects.
InvestingPro Tips highlight that Hain Celestial's net income is expected to grow this year, aligning with CFRA's optimistic earnings per share (EPS) estimates for fiscal years 2025 and 2026. Moreover, the company's valuation implies a strong free cash flow yield, which could be an attractive point for investors seeking companies with the potential for liquidity and investment returns. However, it's important to note that 13 analysts have revised their earnings downwards for the upcoming period, suggesting that there may be challenges ahead that could affect performance.
For those looking for a more comprehensive analysis, InvestingPro offers additional tips on Hain Celestial, providing deeper insights into the company's financial health and future outlook. To explore these insights, investors can visit https://www.investing.com/pro/HAIN, where they will find a total of 10 InvestingPro Tips, including discussions on shareholder yield, profitability, and dividend policies.
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