Guggenheim Downgrades The Honest Co. (HNST) to Neutral
Guggenheim analyst Laurent Grandet downgraded The Honest Co. (NASDAQ: HNST) from Buy to Neutral.
The analyst commented, "Honest reported 4Q results well below the street and our own estimates on the top line and EBITDA with ”Skin & Personal Care” not delivering on the Beauty Re-stage expectation and supply chain issues and cost inflation impacting gross margin severely. In addition, the company guided for much lower expectation in FY22 with sales flat and EBITDA between $-5M to -$10M. We think the miss on the quarter and the FY22 guidance reset that is ~20% lower in revenue ($321M vs. $393M) and about $30M lower (-$7M VS +$21M) in EBITDA than what was expected during the IPO process will not reassure investors on the company’s ability to forecast. We are downgrading HNST to NEUTRAL from BUY for those very same reasons and prefer to stay on the sideline until the business stabilizes and offers more visibility. We are lowering our EPS estimates in FY22 / FY23 to -$0.26 / -$0.15 (prev -$0.07/ $0.01) and introducing our FY24 est. of -$0.08. We are removing our price target (from $12)."
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Shares of The Honest Co. closed at $6.04 yesterday.