The firm said it raised its rating on the over the counter healthcare and household cleaning brands marketer, seller, and distributor, as shares have underperformed the S&P 500 year-to-date, and the stock's valuation has become more "reasonable."
"The flu season remains a wildcard, but we see little else near-term to drive the stock materially higher, particularly given fundamental headwinds," Jefferies said.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
The firm said Prestige Brands' risk/reward is "now more balanced."
Jefferies has a $30 price target on Prestige Brands stock.
The firm anticipates the company will post earnings per share of $1.78 for the current year, and earnings of $1.98 per share for the following year.
Separately, TheStreet Ratings team rates PRESTIGE BRANDS HOLDINGS as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate PRESTIGE BRANDS HOLDINGS (PBH) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 8.7%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for PRESTIGE BRANDS HOLDINGS is rather high; currently it is at 56.99%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PBH's net profit margin of 9.08% significantly trails the industry average.
- PRESTIGE BRANDS HOLDINGS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PRESTIGE BRANDS HOLDINGS increased its bottom line by earning $1.39 versus $1.28 in the prior year. This year, the market expects an improvement in earnings ($1.78 versus $1.39).
- The debt-to-equity ratio is very high at 2.85 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, PBH's quick ratio is somewhat strong at 1.08, demonstrating the ability to handle short-term liquidity needs.
- Net operating cash flow has decreased to $27.39 million or 16.50% when compared to the same quarter last year. Despite a decrease in cash flow of 16.50%, PRESTIGE BRANDS HOLDINGS is in line with the industry average cash flow growth rate of -19.99%.
- You can view the full analysis from the report here: PBH Ratings Report