Shares of The Honest Company (NASDAQ:HNST) are trading lower today, which can be attributed to an analyst downgrade. Indeed, Dana Telsey of Telsey Advisory changed her rating on the stock from Buy to Hold while assigning a price target of $2 per share. For reference, her previous price target was $6 per share.
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Telsey pointed to “significant gross margin and operating expense deleverage” as reasons for the firm’s recent earnings miss. In addition, the analyst sees Honest’s digital channel as a headwind since consumers are shifting back to retail channels. Lastly, Telsey is not confident in the company’s ability to improve revenue and margins after guidance “fell well short of expectations.”
The past five trading days have been rough for HNST stock investors, as shares have fallen off a cliff thanks to its poor earnings report. As a result, the stock is down almost 38% over this timeframe.