Honest Company, the Consumer Defensive sector company, was revisited by a Wall Street analyst today. Analyst Dara Mohsenian from Morgan Stanley maintained a Hold rating on the stock and has a $3.00 price target.
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Dara Mohsenian has given his Hold rating due to a combination of factors impacting the Honest Company’s recent performance and future outlook. The company’s third-quarter results were significantly below expectations, primarily due to a decline in revenue driven by weaker sales in diapers, apparel, and online channels. This decline was exacerbated by the absence of large promotional events that had boosted sales in the previous year.
Additionally, the Honest Company has lowered its full-year guidance, indicating a challenging consumer environment and the need to implement its Transformation 2.0 strategy, which involves cutting low-margin businesses. Despite these challenges, the company has maintained positive EBITDA for eight consecutive quarters and holds a substantial amount of net cash. However, the visibility for future performance remains low, particularly with ongoing issues in the diaper segment and macroeconomic pressures affecting consumer behavior.
In another report released on November 13, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $3.00 price target.
Based on the recent corporate insider activity of 63 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of HNST in relation to earlier this year.