Concerning Nielsen Data Prompts JPMorgan Downgrade Of Energizer Holdings

A bearish case for battery and portable lighting product maker company Energizer Holdings Inc ENR can be made after recent Nielsen data pointed to a concerning outlook, according to JPMorgan.

The Analyst

Andrea Teixeira downgraded Energizer Holdings from Neutral to Underweight with a price target lowered from $45 to $36.

The Thesis

Data from Nielsen shows Energizer's acquired Rayovac battery business is deteriorating in the U.S., Teixeira said in a Wednesday note. (See her track record here.) 

The brand saw shelf space losses and contracted 14.9% year-over-year for the 12-week period ended May 18, the analyst said. 

This would mark an acceleration in shelf space loss, as prior Nielsen data found a 12% loss for the 12-week period ending March 23, Teixeira said. 

The North American market accounts for an estimated 70% of Rayovac's total business and the concerning Nielsen data readout likely implies Rayovac's sell-through rate will remain pressured through the fiscal third quarter of 2020.

Aside from Nielsen data, Energizer faces an overhang risk from Spectrum Brand's 7.6% ownership stake in Energizer, with a lockup period expiring in January 2020.

JPMorgan lowered its 2019 EPS estimate for Energizer Holdings from $2.95 to $2.80.

The firm also lowered its EPS estimates for the next year from $3.31 to $2.97.

Price Action

Energizer hit a new 52-week low of $38.31 Wednesday morning, and the stock was down 6.96% at $38.91 at the time of publication. 

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