The Hain Celestial Group Inc.'s shares jumped Monday after PiperJaffray analysts upgraded their rating on the natural foods company.
THE SPARK: Analysts led by Sean Naughton upgraded their rating on the company's stock to "Overweight" from "Neutral" based on increasing consumer demand for organic, natural, gluten-free foods, as well as those that have not been genetically modified.
They said that Hain Celestial is well-positioned to capitalize on these trends and raised their price target to $94 to $80.
THE BIG PICTURE: Hain Celestial, based in Lake Success, N.Y., owns brands such as Celestial Seasonings, MaraNatha, Earth's Best and Arrowhead Mills.
The upgrade comes just ahead of the company's analyst day on Tuesday.
Consumer demand for natural and organic products has helped move the industry into the mainstream. Shoppers once had to head to specialty shops for many of these items, but can now find them at mainstream grocery stores and big-box retailers.
THE ANALYSIS: The analysts said that Hain is the largest player within the "better for you" foods and products category.
They define that category as including organic, natural, non-GMO and gluten-free products and estimate it is a roughly $60 billion to $70 billion market. While this represents only a small chunk of the total food and beverage market, they expect the niche will grow quickly in the near future as tastes and trends continue to change.
They also noted that Hain should get a boost from Wal-Mart Stores Inc. adding its Ella's baby food pouches and snacks to its stores nationwide.
SHARE ACTION: Shares added $1.53, or 2 percent, to $79.71 in afternoon trading, as the broader markets fell. Hain's shares have traded between $51.51 and $85.48 in the past 52 weeks, and are up about 45 percent since the start of the year.
- Consumer Discretionary
- Food & Cooking
- Hain Celestial
- Celestial Seasonings