HELE - Helen of Troy a new short idea at Hedgeye

Helen of Troy ( NASDAQ: HELE ) was added as a new short idea at Hedgeye with the potential in the long term for the stock to trade down to ~$30, representing 73% downside from current levels.

"Simply put, even in the hottest categories where it has a semi-relevant brand, the company is losing share," Hedgeye analyst Brian McGough wrote in a note on Friday.  "In virtually every category there is a premium competitor taking share at the high end, and a host of lower end brands taking share at the bottom. HELE’s portfolio – with very few exceptions – is stuck in the middle."

McGough sees the longer-term earnings power for Helen of Troy ( HELE ) as "well below" $5 a share, not the $22 the Street is currently "underwriting and the stock is valued upon." He believes long term HELE will trade at "mid-high single digit multiple" on sub $5 EPS.

The Hedgeye short thesis comes after Helen of Troy ( HELE ) reported Q3 results on Thursday morning, beating estimates and raising its guidance for full year sales. The company also announced it's cutting 10% of total staff as part of its Project Pegasus program.

Oppenheimer analyst Rupesh Parikh on Thursday wrote that he sees continued earnings pressure into the next fiscal year and he expects a "difficult outperformance case" until Street estimates "fully reset." Oppenheimer has a perform rating on the stock.

Helen of Troy ( HELE ) short interest is 11.%

Also see SA contributor Quad 7 Capital's piece from Thursday entitled "Helen of Troy: Righting The Ship."

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