Hain Celestial Target Raised To $73 At Canaccord Following 'Efficient' Purchase Of Mona

In a report rolled out Monday, Canaccord analysts Scott Van Winkle and Mark Sigal reiterated a Buy rating on Hain Celestial Group Inc HAIN, while boosting their price target from $69.00 to $73.00. The price target bump responds to the “efficient tuck-in acquisition” of Mona in Europe and an updated model, which implies higher earnings for 2016.

The Buy rating is based on the company’s “broad, multi-channel/multi-brand exposure to the natural/organic food industry,” which should drive consistently robust revenue and earnings growth “that is being aided by accelerated distribution gains into mass market channels and acquisitions."

The analysts believe the purchase of Mona and its plant-based Joya and Happy brands fits perfectly into Hain’s portfolio. They note that “The business is on trend, complementary to existing brands (Dream, Lima and Natumi), and scale is in HAIN's sweet spot (~$50 million in C2014 sales).”

In addition, the acquisition provides Hain with wider geographical reach in Europe, manufacturing leverage and cross-selling opportunities. Moreover, the analysts note, the timing of the transaction was opportunistic, given the relative strength of the U.S. dollar versus the euro and the high price of Hain’s shares.

Financial details of the transaction remain limited. However, the firm estimates that Hain paid around 1x sales for the company, given its acquisition history.

The analysts expect the deal to be modestly accretive to fiscal 2016 EPS. Thus, the EPS estimate for 2016 was raised from $2.13 to $2.17, while the sales estimate was boosted to $3.03 billion from $2.97 billion, mostly driven by Mona, but also by FX movements.