On Thursday, DA Davidson maintained a Buy rating on Helen of Troy (NASDAQ:HELE) and increased the stock's price target to $151.00 from the previous $139.00. The firm adjusted its outlook following the company's reported financial results for the fourth quarter of fiscal year 2024, which included sales and earnings per share (EPS) that surpassed expectations. However, the company's guidance for fiscal year 2025 was below analyst projections.
Helen of Troy anticipates a sales change ranging from a 1% decline to a 2% increase. For the first quarter of fiscal year 2025, sales are expected to drop between 5% and 7%. This forecast is attributed to the absence of flu season reorders and disruptions related to systems. Nonetheless, the company expects organic sales growth to become positive in the second quarter, bolstered by gains in retail distribution.
In response to the guidance and current market conditions, DA Davidson has revised its EPS estimates for Helen of Troy downward by 8%. This adjustment reflects several factors including macro consumer weakness, the loss of a royalty income stream, strategic investments, and the deferral of certain cost savings initiatives.
The new price target of $151 is based on a 14 times multiple of the firm's projected fiscal year 2026 EPS of $9.90. DA Davidson highlights Helen of Troy's low debt levels, robust free cash flow, and a price-to-earnings (P/E) ratio of just 9 times, suggesting that the stock may be attractive to value investors seeking opportunities in the current market.
InvestingPro Insights
As Helen of Troy (NASDAQ:HELE) navigates the fiscal challenges and market dynamics, real-time data from InvestingPro provides a deeper dive into the company's financial health and stock performance. With a current market capitalization of $2.15 billion and a P/E ratio standing at 14.26, the company's valuation metrics suggest that it is trading at a significant level relative to its near-term earnings growth. Despite recent pressure on the stock price, which has seen a one-week total return of -7.81% and a staggering one-month return of -20.46%, analysts believe there is potential for recovery. The stock is trading near its 52-week low, with a price that is 63.13% of the 52-week high, indicating that it may be undervalued.
InvestingPro Tips highlight that Helen of Troy's stock is currently in oversold territory according to the RSI, and with liquid assets that exceed short-term obligations, the company's financial position appears stable. Additionally, analysts predict Helen of Troy will be profitable this year, supported by a profitable track record over the last twelve months. For investors looking for more comprehensive analysis, there are 11 additional InvestingPro Tips available to guide your investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
These insights and metrics can be particularly useful for investors considering DA Davidson's Buy rating and revised price target. Keeping an eye on the company's performance and analysts' expectations could offer valuable clues about the stock's future direction.
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