Why Turning Point Brands Stock Was Sliding This Week
Key Points
Its CEO resigned unexpectedly.
This was compounded by a significant price target reduction from an analyst.
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Turning Point Brands (NYSE: TPB) is surely ready to head into the weekend. That's because the trailing few trading days weren't kind to the tobacco company's stock.
On the back of a surprise resignation, an unwelcome change to annual profitability guidance, and a deep price target cut from an analyst, investors bailed out of its shares. They were down by almost 12% week to date as of early Friday morning, according to data compiled by S&P Global Market Intelligence.
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A departure and a cut
Turning Point kicked off the week by announcing a C-Suite departure on Monday. CEO Graham Purdy is stepping down from his position due to what the company said were "personal circumstances that require his immediate attention," without elaborating.
His successor, David Glazek, is currently the executive chairman of Turning Point's board of directors. He will take up his post this coming Thursday, Oct. 1.
In announcing the CEO change, Turning Point updated its guidance for all of 2026. The forecast for net sales of its oral tobacco products, the top revenue generator, was maintained at $260 million to $270 million for the year.
The company lowered the top end of its earnings before interest, taxes, depreciation, and amortization (EBITDA) to $70 miillion to $80 miillion. The preceding range was $70 million to $90 million.
The following day, Oppenheimer's Ian Zaffino significantly reduced his Turning Point price target. He cut it to $90 per share from $130, while maintaining his outperform (i.e., buy) recommendation.
Not so flavorful
That combination of a surprising CEO departure and reduced EBITDA expectations is giving investors pause to think whether they want to own Turning Point stock, and I don't blame them. If I were a shareholder, I'd wait and see how (and if) the company's strategy changes under the new leader, and what he aims to do to drive mid- to long-term growth.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Turning Point Brands. The Motley Fool has a disclosure policy.
