Honest Company shares accelerate on bullish take from Telsey Advisory

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The Honest Company (NASDAQ:HNST) stock shot up over 7% on Monday after Telsey Advisory told clients the company is still attractive despite a somewhat disappointing earnings result on Friday.

The gain adds to a modest rise in share price on Friday despite a 600 basis points decline in margins from the prior year as freight and raw material costs increased significantly, leading to wider losses than anticipated.

While the somewhat messy earnings release caused Dana Telsey to cut her price target to $8 from a prior $12, it did not cause her to move away from her long-held bullish thesis. The firm reiterated its belief that the Jessica Alba-founded company is “well-positioned in an attractive health and wellness category” and that revenue growth remains healthy for a company in its space. Further, she indicated the guidance that reflects a rebound into the year end, accelerating most sharply into the fourth quarter, keep her confident in the long term prospects for shares.

Wall Street analysts remain divided on the name, with 3 Buy ratings, 3 Holds, and 1 Sell recorded in Seeking Alpha data. Telsey’s price target remains a Street-high, contrasting sharply with the low of $3.

Shares rose 7.38% in afternoon trading on Monday.

Read more on why SeekingAlpha’s Quant Ratings rate the stock a Sell.

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