Hain Celestial Stock Selloff May Be Excessive, Says Argus

The lead analyst is not worried about the 26 percent single-day drop on August 16 following an accounting investigation announcement. Aside from that, the company's delay in the fourth-quarter results and doubts in meeting fiscal year 2016 outlook have dampened the spirits of investors. However, the brokerage termed the reaction to the news as excessive.

Argus believes the company has good prospects driven by extensive organic and natural food brands. Furthermore, Hain Celestial is likely to gain from a number of distribution channels apart from its successful acquisitions.

Related Link: Wunderlich Reiterates Buy On Hain Celestial Despite "Setback"; Says Board May Mull Sale Of Co.

The lead analyst said in his research note, "However, given the revenue and earnings warning and uncertainty regarding the extent of the accounting issues, we are reducing our EPS estimates for this year and next."

Additionally, the brokerage sees gross margins pressure in the next several quarters on promotional activities focused on attracting middle-class customers. However, the analyst sees higher operating margins reflecting the gains in connection with the Premier Foods acquisition and positive operating leverage.

At time of writing, Hain Celestial was down 4.17 percent at $37.71.