Shares of The Honest Company (HNST) tanked 20.4% in Thursday’s extended trade and a further 19.2% at the time of writing after it posted poor fourth-quarter results.
The consumer products company offers eco-friendly diapers and a natural line of bath, skincare, home cleaning, and organic nutritional supplement products.
Results in Detail
The company reported a quarterly loss of $0.10 per share, wider than the Street’s estimated loss of $0.06 per share. HNST had posted a loss of $0.37 per share in the year-ago quarter.
Revenues climbed 3% year-over-year to $80.4 million but missed the consensus estimate of $84.6 million. The quarter witnessed growth in Skin and Personal Care, and Diapers and Wipes product categories, which was partially offset by the decline in COVID-19 related products such as sanitizers and disinfectants.
Adjusted EBITDA in the quarter was a loss of $3.9 million against earnings of $1.1 million in the fourth quarter of 2020. This was mainly due to inventory write-downs related to sanitizing and disinfecting products and donation of face masks.
For 2021, Honest has reported a 6% year-over-year rise in revenues to $318.6 million. Net loss has, however, remained stable at $0.43 per share.
Outlook
Honest projects full-year 2022 revenues to remain flat year-over-year, reflecting a decline in the first-quarter revenues, followed by expected growth in the remaining three quarters of 2022.
The company expects growth in diapers and wipes, and skin and personal care products to be in the mid-single digits after the first quarter of 2022. The Household and Wellness product category is expected to face continued headwinds due to reduced consumer demand for COVID-related sanitizing and disinfecting products.
Adjusted EBITDA is anticipated to be between a loss of $5 million and $10 million in 2022.
Stock Rating
Following the release, Jefferies analyst Stephanie Wissink downgraded Honest’s rating to Hold from Buy with a price target of $5 (implying 17.2% downside potential).
The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on one Buy and two Holds. Honest’s average price target of $8 implies 32.5% upside potential to current levels.
Blogger Opinion
TipRanks data shows that financial blogger opinions are 100% Bullish on HNST, compared to a sector average of 68%.
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