The Honest Company, Inc. (NASDAQ: HNST) reported weaker-than-expected Q1 results, modestly missing both earnings and revenue estimates.
Despite the miss, shares of the American consumer goods company, founded by actress Jessica Alba and with a focus on safe baby and beauty products, gained 8.2% on May 13 to close at $3.17.
Investors welcomed the reiterated full-year 2022 outlook based on the company’s confidence to return to growth over the next three quarters based on strong pricing execution, newer innovations, and improved retail distribution.
Q1 Numbers
The company reported an adjusted loss of $0.16 per share, which fell a cent short of the street’s estimated loss of $0.15.
The revenue of $68.72 million decreased 15% year-over-year and was also modestly short of the $68.8 million consensus.
The decline was due to difficult comps from higher sales in the year-ago quarter, driven by sanitizing and disinfecting products sales as well as liquidation of legacy beauty inventory ahead of last year’s Beauty Restage.
Reiterated FY2022 Outlook
Despite the Q1 miss, management reiterated financial guidance for FY2022 and expects to return to growth over the next three quarters based on newer innovations, expanded new strategic retail partners as well as improved digital experience.
For the full year 2022, the company continues to forecast revenues to be approximately flat compared to 2021. This implies mid-single-digit year-over-year growth over the remaining three quarters.
CEO’s Comments
The Honest Company CEO, Nick Vlahos, commented, “While inflation and supply chain pressures continue to challenge Honest and the industry, we remain deeply focused on what we can control…”
He further added, “Our capital position allows us to fund growth investments in our digital platform and product innovation without having to access the external markets in a rising interest rate environment.”
Wall Street’s Take
The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on four Buys, three Holds and one Sell. The average Honest Company price target of $6.96 implies a 119.56% upside potential to current levels at the time of writing.
Bloggers Weigh In
TipRanks data shows that financial blogger opinions are 100% Bullish on HNST stock, compared to a sector average of 66%.
Key Take-Away
Despite the heightened macro headwinds severely impacting the industry, the company reiterated its full-year outlook.
Further, the company remains confident to return to profitability on strong pricing, innovation, and an execution as well as investments in digital capabilities and expanded distribution footprint.
Investors lauded the confidence as well as the positive outlook that bodes well for the stock in the long run.
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