Please ensure Javascript is enabled for purposes of website accessibility

Why Hain Celestial Stock Fell 12.5% in October

By Keith Noonan - Updated Nov 3, 2017 at 1:43PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On the heels of big gains over the summer, Hain Celestial stock continued to cool off last month.

What happened

Hain Celestial (HAIN -0.17%) stock fell 12.5% in October, according to data from S&P Global Market Intelligence, as speculation about the company being bought out waned and a ratings downgrade from BMO Capital spurred sell-offs.

A box of Almond Sunset flavor Celestial Seasonings tea

Image source: Hain Celestial.

So what

Hain Celestial stock posted big gains over the summer, as the company emerged from an accounting review and audit conducted by the Securities and Exchange Commission with favorable findings. With regulatory issues out of the way, shares climbed on the possibility of the company being acquired, but lost ground in October as the related excitement abated.

In a report published Oct. 19, BMO Capital lowered its rating on the stock from "market outperform" to "market perform." The investment banking company cited concerns about earnings growth and reduced likelihood of the company being acquired, and lowered its price target from $48 to $44. Shares currently trade at roughly $37.50, so even hitting the lowered target would represent roughly 17% upside from current prices.

Now what

Hain is one of the few pure plays left in the health-foods category, and a buyout continues to look like a realistic possibility. A potential acquisition isn't the only avenue to capital appreciation, however. The company is seeing solid sales growth in international markets, and is focusing on trimming down its brand catalog and implementing other cost-saving measures. The company expects earnings for the current fiscal year to come in between $1.63 and $1.80 -- representing roughly 41% growth year over year at the midpoint.

Hain Celestial is set to have a conference call on Nov. 7 to discuss results for its September-ended quarter. Shares are trading down roughly 9% year to date, and at roughly 21.5 times this year's expected earnings.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Hain Celestial Group, Inc. Stock Quote
The Hain Celestial Group, Inc.
$23.88 (-0.17%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.