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.
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.
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.