HNST - The Honest Company (HNST) stock analysis: ripe for more upside
2024-03-07 05:41:08 ET
The Honest Company (NASDAQ: HNST) stock price continued its remarkable comeback after the company published strong financial results. It soared by over 25% in the pre-market session, making it one of the best performers. This surge means that it has risen by over 280% from its lowest level in 2023.
Turnaround continues
Jessica Alba’s Honest Company has been in a rollercoaster in the past few years. After surging to a record high of $23.87 in May 2021, the stock plunged by over 95% as it became an unloved penny stock. There were elevated risks that the company would go bankrupt.
Recently, however, there are signs that its demand is recovering, which has pushed its stock surging. This surge started after the company published strong financial results in November last year and then accelerated after its results on Wednesday.
These results revealed that its business was starting to boom as its digital channels gained steam. Its total revenue rose by 10% YoY to $90 million. This increase brought its total annual revenue to over $342 million, up from the previous $314 million.
The Honest Company’s results were driven by its diapers and wipes segment followed by skin and personal care products. Its household and wellness revenue continued soaring as demand for baby clothing business.
There were other positive aspects in the report. For example, the amount of cash in its balance sheet more than doubled to $33 million while inventory fell by $42 million. Also, the company achieved the milestone of becoming cash flow positive.
Still, The Honest Company, which has a market cap of over $285 million has a lot of work ahead of it to validate its $300 million market cap. It needs to continually grow its market share in a highly-competitive market.
The Honest Company stock price forecast
Turning to the daily chart, we see that the HNST share price has made a strong recovery recently, helped by its turnaround strategy. This rebound accelerated this week after it published strong financial results.
As it jumped, the stock moved above the key resistance point at $3.65, its highest point this year. It has also invalidated the double-top pattern that has been forming recently.
The stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA) while volume has bounced back.
Therefore, the outlook for the stock is extremely bullish, with the next target point to watch being at $4.52, its highest point on August 16th 2022. This target is about 43% above the closing price on Wednesday.
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