What Happened?
Shares of personal care company Edgewell Personal Care (NYSE: EPC) jumped 8.3% in the afternoon session after Morgan Stanley upgraded the stock to Equalweight, suggesting the shares may have bottomed out after a steep post-earnings decline. The upgrade followed a steep plunge in the stock's price after the company reported disappointing third-quarter results and lowered its full-year guidance. Edgewell's sales and earnings per share both missed analyst expectations, which the company blamed on a weak sun care season. Morgan Stanley noted that the stock's valuation became compressed after its significant drop. Separately, analysts at Canaccord Genuity maintained a Buy rating, and they believed the stock was oversold, even as they reduced their price target.
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What Is The Market Telling Us
Edgewell Personal Care’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 22% on the news that the company reported disappointing third-quarter financial results and cut its full-year outlook. The consumer products maker posted third-quarter revenue of $627.2 million, a 3.2% decrease from the same period last year, missing analyst estimates. Adjusted earnings per share also came in below expectations at $0.92. Edgewell pointed to a challenging Sun Care season, especially in North America, as the primary reason for the slump. As a result, the company lowered its full-year earnings forecast to approximately $2.65 per share, a significant reduction from its previous guidance. This combination of a quarterly miss and a weaker outlook for the year ahead prompted a sharp negative reaction from investors.
Edgewell Personal Care is down 34.8% since the beginning of the year, and at $21.83 per share, it is trading 45.7% below its 52-week high of $40.22 from August 2024. Investors who bought $1,000 worth of Edgewell Personal Care’s shares 5 years ago would now be looking at an investment worth $768.62.
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