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Honest Company (NASDAQ:HNST) rallied 6.00% in Tuesday morning trading after Loop Capital upgraded the retailer to a Buy rating from Hold.
Analyst Laura Champine noted that shares of Honest (HNST) have declined 26% this year, despite healthy Q1 sales growth, profitability improvements, and a solid balance sheet. Looking ahead, Champine and her team think continued growth will be a sufficient catalyst for the stock as it moves through the year. Notably, price increases are flowing through now on a year-over-year basis as Honest (HNST) plays catch up to industry inflation.
Honest’s (HNST) incremental price increases are seen driving sales 2% higher before unit growth is even factored in. That leaves Loop Capital confident that there is upside to the consensus mark on HNST.
The Honest Company (HNST), founded by actress Jessica Alba, went public on May 4, 2021, with an initial public offering price of $16 per share. The pricing gave the company a valuation of approximately $1.44 billion at the time of its IPO. However, the stock’s performance since then has been disappointing for early investors, with shares currently swapping hands at $2.65 per share. The Los Angeles-based company has posted only one profitable quarter since going public.
