Prestige Consumer Healthcare falls on earnings miss, guidance cut
Clear Eyes supply constraints and challenging consumer environment weigh on Q3 results and full-year outlook
Prestige Consumer Healthcare shares declined in Thursday trading after the over-the-counter healthcare products maker reported third-quarter results that fell short of Wall Street expectations and issued full-year guidance that came in slightly below analyst consensus estimates.
The Tarrytown, New York-based company reported fiscal third-quarter revenue of $283.4 million, missing analyst expectations of approximately $286.5 million. Adjusted diluted earnings per share of $1.14 also fell short of the $1.16 consensus estimate, according to StreetInsider data.
More concerning for investors was the company's updated fiscal 2026 outlook, which narrowed full-year adjusted diluted EPS guidance to approximately $4.54—below the analyst consensus of $4.56. Revenue guidance of approximately $1.1 billion also trailed the $1.11 billion consensus estimate. The company projected organic growth would decline between 1.5% and 3% for the full fiscal year, reflecting what management described as a "challenging consumer backdrop."
The primary driver behind the disappointing performance has been ongoing supply constraints affecting the company's Clear Eyes® brand, a key product in its ear and eye care portfolio. Management acknowledged that limited ability to meet demand for Clear Eyes has weighed on category sales, though they noted sequential improvements during the quarter as the company works through integration of newly acquired production capabilities.
The company completed the acquisition of Pillar5 Pharma in December, a strategic move aimed at securing long-term supply for Clear Eyes through new suppliers and a high-speed production line. However, the benefits of vertical integration have yet to fully materialize in the company's financial results.
Despite the quarterly stumble, analysts remain broadly supportive of the stock. The consensus rating stands at "Buy" with an average price target of approximately $84.50, representing significant upside potential from current levels, according to MarketBeat data. Individual analyst targets range from $66.00 to $104.00, suggesting disagreement about how quickly Prestige can resolve its supply chain challenges and return to growth.
Prestige Consumer Healthcare, which owns a portfolio of well-known over-the-counter brands including Compound W, Chloraseptic, and Dramamine, has historically been viewed as a stable defensive play in the healthcare sector. However, the combination of supply chain disruptions and pressure on consumer spending has exposed vulnerabilities in its business model.
The company maintained its fiscal 2026 free cash flow guidance of $245 million or more, indicating that underlying cash generation remains healthy despite the near-term operational challenges. During the quarter, the company also repurchased approximately 800,000 shares opportunistically, signaling management's confidence in the stock's long-term value proposition.
Looking ahead, investors will be watching closely for signs that Clear Eyes supply constraints are materially improving, with management having previously anticipated better availability during the third and fourth quarters. The company's ability to restore shelf presence and capture pent-up demand will be critical to regaining momentum in the ear and eye care category.
The broader consumer backdrop remains a wildcard, as inflationary pressures and economic uncertainty continue to affect consumer spending patterns on discretionary healthcare products. How quickly Prestige can navigate these headwinds while executing on its supply chain integration will determine whether the current stock decline represents a buying opportunity or a more prolonged period of underperformance.