Why Hain Celestial is falling apart today
Actions of Heavenly hate (NASDAQ: HAIN) fell more than 11% in morning trading on Thursday after the tea and organic food company said it would issue nearly 12.4 million new shares in a secondary offering. As of 12:38 p.m. EST, shares were down 10.6%.
In an expected range of $ 45.50 to $ 46.50 per share, Hain would raise around $ 570 million, but even if the mid-point price was only about 4% lower than the close of the l action yesterday, the market reacted badly to the announcement.
The secondary offering would increase Hain’s stock count by around 13%, while the company said it was also repurchasing around 1.7 million shares held by one of its investors, Engaged Capital. The tranche represents nearly half of the private equity firm’s stake since it will still hold more than 1.9 million shares. The founder of Engaged Capital is also a director of Hain.
The tea and food specialist said it plans to fund the buyout using its revolving credit facility.
The stock announcements overshadowed what might have been a good day for Hain Celestial, as group analyst Maxim Anthony Vendetti reiterated his buy rating and raised his target price from $ 52 per share to $ 63 per share.
The Fly reports that Vendetti told investors that Hain did better than expected in his recent earnings report and is making the right decisions to offset the impact of inflation and supply chain disruptions. Hain increased the list prices of all its brands, found alternative suppliers and reduced the number of shipments to be made by consolidating orders.
Whether Vendetti will maintain its new price target remains to be seen, but it is now almost 50% higher from where Hain’s stock is currently trading.
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