Helen of Troy Upped to Strong Buy on Entering Health Biz - Analyst Blog
On Jun 27, Zacks Investment Research upgraded consumer product company Helen of Troy Limited ( HELE ) to a Zacks Rank #1 (Strong Buy) backed by the recent initiatives to expand in the growing health and wellness business.
Helen of Troy has witnessed sharp upward estimate revisions after it made several strategic acquisitions and agreements in the recent past to cement its presence in the health and wellness category.
In June, Helen of Troy entered into a licensing agreement with the pioneer of healthy non-stick cookware, The Cookware Company.
Under the agreement, Cookware is scheduled to launch three high-quality cookware products bearing the brand name OXO Good Grips. The cookware will feature the popular Universal Design of OXO along with Cookware Company's premium materials, best-in-class Perfluorooctanoic (PFOA)-free coatings and advanced manufacturing and forging processes.
The OXO brand is widely known for offering user-friendly consumer products. The agreement will not only facilitate OXO brand's entry into the category of non-stick utensils, but also broaden Tarrytown, NY-based Cookware's platform.
We are encouraged by Helen of Troy's foray into newer categories. The company's entrance into non-stick cookware closely follows its decision to acquire the U.S.-based retailer and health publisher Healthy Directions, LLC and its subsidiaries to enter the growing vitamins, minerals and supplements (VMS) category in May 2014.
The deal is expected to be closed in the second quarter of fiscal 2014. Post acquisition, Healthy Directions will continue to operate from Bethesda, MD under its current management team.
The Healthy Directions acquisition is expected to be accretive to revenues by more than 10% on an annualized basis and also boost cash flow, adjusted EBITDA and adjusted earnings per share.
The future of the VMC business looks bright because according to Nutrition Business Journal, the market is expected to continue growing at a mid-to-high single-digit rate annually through 2020. Moreover, per the journal, more than 70% of the U.S. population, aged 55 years and above took vitamin supplements in 2013.
Moreover, per the U.S. Census Bureau's forecast, national population, is expected to grow more than 50% between 2012 and 2025. In addition, the Census projects that the number of people above the age of 75 years will grow more than 40% during the same period.
Apart from Cookware and Health Directions, Helen of Troy has entered into several strategic relationships with consumer product giants The Procter & Gamble Co. ( PG ), Unilever plc ( UL ) and Revlon, Inc. ( REV ).
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