What Happened?
Shares of skincare company BeautyHealth (NASDAQ:SKIN) jumped 18.2% in the morning session after the company reported impressive third-quarter earnings that blew past analysts' EBITDA and EBITDA guidance expectations. Notably, the company turned a profit while Wall Street had predicted a loss. Revenue also beat expectations, though sales declined relative to the previous year. The decline in revenue was primarily due to challenges in system sales, particularly in international markets like China. As a result, the company reduced its full-year sales outlook. To overcome some of the challenges impeding growth, the company revamped its commercial leadership team and appointed a new Chief Revenue Officer and Chief Marketing Officer with more relevant expertise. Also, it provided more flexible pricing for markets affected by high interest rates and limited financing availability.
Overall, this was a mixed quarter, with the stock's reaction suggesting markets are impressed by the improved profitability amid hopes for sales growth to normalize. After the initial pop the shares cooled down to $1.77, up 3.8% from previous close.
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What The Market Is Telling Us
BeautyHealth’s shares are extremely volatile and have had 76 moves greater than 5% over the last year. But moves this big are rare even for BeautyHealth and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock gained 38.5% on the news that the company reported fourth-quarter results that blew past analysts' revenue expectations, driven by outperformance in "Americas consumables net sales and strong device placement in Asia-Pacific". This also enabled the company to beat Wall Street's EPS estimates.
On the other hand, its gross margin missed analysts' expectations as it had "higher inventory related charges and higher product and warranty costs". Lastly, its full-year revenue and EBITDA guidance aligned with analysts' forecasts. Overall, this was a great quarter because of the top line beat.
BeautyHealth is down 42.9% since the beginning of the year, and at $1.77 per share, it is trading 61% below its 52-week high of $4.53 from March 2024.
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