HNST Should I Buy
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Honest Company Inc (HNST) is not a strong buy for a beginner, long-term investor with $50,000-$100,000 available for investment. The stock shows weak technical indicators, negative analyst sentiment, and limited positive catalysts. While the company has shown an improvement in net income, revenue decline and competitive pressures in its core business make it a risky investment at this time. Holding off for now is the most prudent decision.
The technical indicators for HNST are bearish. The MACD is negative and expanding downward, the RSI is neutral at 20.573, and the moving averages indicate a bearish trend (SMA_200 > SMA_20 > SMA_5). The stock is trading below its pivot level of 2.305, with key support at 2.008 and resistance at 2.488.
Additionally, the upcoming earnings report on February 25, 2026, could provide further clarity on the company's financial health.
Analyst sentiment is negative, with JPMorgan downgrading the stock to Underweight and Morgan Stanley lowering its price target. The company faces heightened competitive pressures in its core diaper business and has had to implement a productivity program to exit lower-margin categories. Revenue has declined (-6.72% YoY), and gross margin has decreased (-3.70% YoY).
In Q3 2025, revenue dropped to $92.57M (-6.72% YoY), while net income increased significantly to $758K (+359.39% YoY). EPS remained flat at 0.01, and gross margin declined to 37.26% (-3.70% YoY). The company's financial performance shows mixed signals, with profitability improving but revenue and margins under pressure.
Analyst sentiment is bearish. JPMorgan downgraded the stock to Underweight, citing competitive pressures and the need for increased promotions. Morgan Stanley lowered its price target from $4.25 to $3, citing weaker-than-expected Q3 results and low visibility due to the company's Transformation 2.0 program.
