EPC - Morgan Stanley warns on Edgewell Personal Care ahead of earnings

Morgan Stanley cut its rating on Edgewell Personal Care Company ( NYSE: EPC ) to Underweight from Equalweight ahead of the company's Q3 earnings report on November 15.

Analyst Dara Mohsenian and team expect below consensus Q3 revenue and FY23 EPS guidance from EPC and warn on stretched valuation following recent stock outperformance.

"We see risk to FY23 consensus as sales weaken on more difficult comparisons, confirmed by Q3 sales weakness in US tracked channels, including recent deteriorating EPC market share trends, as well as underappreciated FX headwinds with EPC's sizeable 43% international sales mix and the stronger dollar recently."

Morgan Stanley said it is now ~2% below consensus revenue estimates for FY23 and FY24 and 6% to 7% below the consensus marks for FY23-FY24 EPS.

The firm also sees downside to valuation after EPC's recent stock outperformance vs. peers. The price target is lowered to $36 from $40 off a lowered PT multiple of ~9.5x CY23 EV/EBITDA multiple.

Shares of EPC fell 1.42% in premarket trading to $38.13.

The Seeking Alpha Quant Rating on EPC is flashing Hold.

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