With a $235.72 million market cap, Thorne HealthTech, Inc. (THRN) is a science-driven wellness company that provides solutions and personalized approaches to health and wellness in the United States and internationally. It offers various health tests, including sleep, stress, weight management, biological age, and gut health. Also, the company provides nutritional supplements and wellness education solutions.
THRN reported solid first-quarter results with robust growth across sales channels and reaffirmed full-year 2022 guidance. The company expects net sales of $240 million to $250 million, adjusted EBITDA of $30 million to $35 million, and adjusted EPS of $0.28 to $0.30.
THRN continues strengthening its position in all its end markets through health campaigns, partnerships, and product launches. On May 24, THRN relaunched its Gut Health Test, including its patent-pending Microbiome Wipe, a first-to-market approach to microbiome testing.
“The inclusion of the Microbiome Wipe in our Gut Health Test provides an opportunity for users to access testing without the discomfort and hygiene concerns of traditional stool sample collection. This new approach to gut health testing will arm our customers with the data and personalized solutions they need to live healthier for longer,” said Dr. Nathan Price, THRN’s Chief Scientific Officer.
In addition, on April 6, THRN was announced as USA Boxing’s official performance nutrition partner for 2022. Through this partnership, THRN will provide USA Boxing’s national teams with its premier NSF Certified for Sport® product line to support the overall performance of boxers in 2022. This partnership is expected to extend the company’s market reach and boost its revenue streams.
However, THRN’s shares have plunged 28% year-to-date to close the last trading session at $4.47. The dampened market sentiment has contributed to the stock’s decline.
Here is what could influence THRN’s performance in the upcoming months:
Robust Financials
THRN's net sales increased 22.9% year-over-year to $54.67 million in the fiscal 2022 first quarter ended March 31, 2022. The company’s gross margin amounted to $30.12 million, up 29.6% year-over-year. Its adjusted EBITDA grew 3.6% year-over-year to $8.65 million.
Furthermore, the company’s adjusted net income before adjusted tax expense rose 2.8% year-over-year to $7.28 million. Also, its adjusted net income came in at $6.55 million, registering an increase of 2.8% from the prior-year period.
Favorable Analyst Estimates
Analysts expect THRN's revenue for the fiscal 2022 third quarter (ending September 2022) to come in at $65.87 million, representing a rise of 37.2% from the same period in 2021. The $0.08 consensus EPS estimate for the ongoing quarter indicates a 700% year-over-year increase.
In addition, THRN’s revenue and EPS for its fiscal year 2022 (ending December 2022) are expected to grow 33.4% and 230%, respectively, year-over-year. Also, Street expects the company's EPS to grow 148.9% per annum over the next five years.
High Profitability
THRN’s trailing-12-months gross profit margin of 53.3% is 60.6% higher than the 53.3% industry average. And its trailing-12-months ROCE of 39.60% is 219.9% higher than the 12.38% industry average. Furthermore, the company’s trailing-12-months asset turnover ratio of 1.22% is 50.1% higher than the industry average of 0.82%.
Discounted Valuation
In terms of forward non-GAAP P/E, THRN’s 13.15x is 26% lower than the 17.76x industry average. Its 3.93x forward EV/Sales is 49.2% lower than the 1.83x industry average. Also, the stock’s 7.43x forward EV/EBITDA is 35.7% lower than the 11.56x industry average.
Consensus Rating and Price Target Indicate Potential Upside
Each of the two Wall Street analysts that rated THRN rated it Buy. The 12-month median price target of $11.50 indicates a 157.3% potential upside. The price targets range from a low of $11.00 to a high of $12.00.
POWR Ratings Show Promise
THRN has an overall A rating, equating to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
THRN has a grade of A for Sentiment, consistent with its favorable revenue and earnings growth estimates. In addition, the stock has a B grade for Value, which is in sync with its lower-than-industry valuation ratios.
THRN is ranked #7 out of 86 stocks in the B-rated Food Makers industry.
Beyond what I have stated above, we have also given THRN grades for Quality, Momentum, Growth, and Stability. Get access to all the THRN ratings here.
Bottom Line
THRN reported strong financial results for the fiscal 2022 first quarter and asserted continued growth for the full-year 2022. Furthermore, the company is well-positioned to benefit from partnerships, new product launches, and campaigns.
Given the company’s strong financials, lower-than-industry valuations, high profitability, and solid revenue and earnings growth estimates, it could be wise to invest in the stock now.
How Does Thorne HealthTech, Inc. (THRN) Stack Up Against its Peers?
THRN has an overall POWR Rating of A. One could also check out these other stocks within the Food Makers industry with an A (Strong Buy) rating: Grupo Bimbo, S.A.B. de C.V. (GRBMF), JBS S.A. (JBSAY), and Sanderson Farms, Inc. (SAFM).
THRN shares were trading at $4.51 per share on Thursday afternoon, up $0.04 (+0.89%). Year-to-date, THRN has declined -27.38%, versus a -19.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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