UPDATE: Loop Capital Downgrades The Honest Co. (HNST) to Hold
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Loop Capital analyst Laura Champine downgraded The Honest Co. (NASDAQ: HNST) from Buy to Hold with a price target of $3.00 (from $5.00).
The analyst comments "We are downgrading our rating from Buy to Hold and lowering our PT on shares of HNST from $5 to $3. We are concerned with comments from mass retailers, including HNST’s largest customer - TGT. Our PT moves lower on sales cuts and long-term estimates for lower gross margin as we expect inflation above our prior expectations. Our sales estimates are now below consensus this year and next year. We expect Honest revenue to be -1% in 2022, with 34% gross margin. A month ago, HNST management said it expected sales and margin to recover as we move through the year. We now think this will be tougher with retailers destocking and continued cost inflation. We believe the current 10-15% premium HNST products command is likely to remain stable even as the company raises prices in 2022, as all vendors are under pressure to raise prices."
Shares of The Honest Co. closed at $3.30 yesterday.
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