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Hain Celestial Group (HAIN) PT Lifted To $52 By RBC Capital, 'Outperform' Maintained

 May 04, 2012 03:09 PM

RBC Capital Markets analyst Edward Aaron increased his price target on shares of Hain Celestial Group Inc. (NASDAQ:HAIN) to $52 from $44, while maintaining "Outperform" rating.

After the company's third quarter results, the brokerage raised its 2012 EPS estimate to $1.79 from $1.70 and its 2013 estimate to $2.07 from $1.97. The firm lowered its 2012 revenue estimate to $1.403 billion from $1.456 billion and its 2013 estimate to $1.608 billion from $1.663 billion.

Hain reported a Q3 beat, raised full-year guidance and announced both an acquisition and a planned divestiture in the U.K. Adjusted EPS of $0.54 beat by $0.04, with the upside versus Aaron's model coming below the line (mostly tax rate).

[Related -The Hain Celestial Group, Inc. (HAIN): Surging On Huge Growth In Organic Foods]

Line item variances were relatively small after adjusting for the reclassification of a business (private label ready meals) to discontinued operations.

Management raised full-year EPS guidance to $1.76-$1.80 (prior $1.63-$1.73). Sales guidance was essentially unchanged after accounting for discontinued operations. The raise reflects better margin performance and, to a lesser extent, a more favorable tax rate versus prior expectations.

While there was some below-the-line benefit in the quarter, Aaron was encouraged by results considering estimates reflected strong sales and earnings growth expectations. Organic growth trends (up 9% to 10% in Q3) and positive estimate revisions keep the story intact, and Aaron raised his estimates and price target accordingly.

[Related -Forget Whole Foods, Buy These 4 Little-Known Stocks Instead]

Aaron wouldn't be surprised to see the stock take a breather following a good run. He would look to add to positions on weakness. He raised estimates to reflect current trends and updated guidance. He increased his price target to reflect updated estimates and recent multiple expansion in the natural/organic food sector.

Hain Celestial Group manufactures, markets, distributes and sells natural and organic products under brand names which are sold as better-for-you products.

HAIN is trading up 6.81% at $50.50 on Friday.



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