Rising Global Wealth And Clean Beauty Will Fuel Growth

Key Takeaways

• Viral product launches and strong digital strategy could significantly accelerate revenue growth and enhance margins beyond current market expectations.
  
• Waldencast's asset-light, omnichannel model and early international expansion position it for strong premiumization, acquisition opportunities, and higher-than-expected long-term earnings growth.
  
• Reliance on a multi-brand roll-up strategy, overexposure to key brands, and mounting regulatory and digital shifts threaten profitability, growth, and long-term financial stability.

Catalysts

Operates in the beauty and wellness industry in the United States, Canada, Europe, the Middle East, India, Australia, and New Zealand.

• Analyst consensus expects only mid-teens revenue growth from Milk Makeup's Ulta expansion and innovation pipeline, but with the initial Hydro Grip Gel Skin Tint launch rapidly selling out-combined with potential access to Ulta's full 1,900-store footprint and viral community-driven demand-actual growth could accelerate rapidly toward high-20s or even low-30s percentage revenue gains, which would make current valuation multiples appear extremely conservative.
  
• While analysts broadly agree on margin improvements from operational efficiencies and flywheel effects, they are underappreciating the SG&A and G&A leverage possible as the company achieves greater scale, with management signaling robust cost controls at both brand and group levels and a reallocation of spending into digital marketing expected to drive structurally higher net margins and faster earnings growth than the consensus model implies.
  
• The company's asset-light platform and proven ability to incubate and scale digitally native brands uniquely positions Waldencast to rapidly capitalize on the ongoing premiumization and "clean beauty" trend as global middle-class wealth expands, especially in underpenetrated markets, unlocking a high-margin growth runway that could double revenue over the coming years.
  
• Waldencast is at an early stage of international expansion, with only limited presence in emerging markets and significant whitespace ahead; as e-commerce and wellness adoption accelerates worldwide, the company's digital-first omnichannel approach should enable them to capture disproportionate share gains and secure premium pricing, substantially boosting both revenue growth and margins.
  
• With persistent industry M&A activity and Waldencast's operational momentum, the platform's attractiveness for founder-led brands or bolt-on acquisitions is likely to accelerate, enabling step-function revenue diversification and synergy-driven margin upside that consensus estimates do not capture, driving superior long-term earnings growth.

Waldencast Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Waldencast compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Waldencast's revenue will grow by 17.2% annually over the next 3 years.
• Even the bullish analysts are not forecasting that Waldencast will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Waldencast's profit margin will increase from -15.5% to the average US Personal Products industry of 5.6% in 3 years.
• If Waldencast's profit margin were to converge on the industry average, you could expect earnings to reach $24.7 million (and earnings per share of $0.2) by about August 2028, up from $-42.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 32.5x on those 2028 earnings, up from -4.8x today. This future PE is greater than the current PE for the US Personal Products industry at 19.8x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.6%, as per the Simply Wall St company report.

Waldencast Future Earnings Per Share Growth

Risks

• Waldencast's reliance on a roll-up and multi-brand approach brings ongoing integration risks, as evidenced by persistent supply chain disruptions and inflexibility, which can elevate SG&A expenses and suppress net margins over the long term.
  
• The company's overexposure to a limited number of brands-most notably Milk Makeup and Obagi Medical-means a downturn or shift in consumer preferences for these products could disproportionately weaken revenue growth, as seen in the 15.1 percent decline in Milk Makeup sales this quarter.
  
• Rising global scrutiny on product ingredients and environmental practices could drive higher regulatory compliance and reformulation costs, pressuring margins and potentially restricting market access in key international markets, negatively impacting earnings.
  
• The accelerating shift in consumer engagement toward digitally native brands, AI-powered personalization, and direct-to-avatar commerce risks making Waldencast's traditional retail and product innovation playbook less relevant, threatening its top-line momentum in future years.
  
• Heavy goodwill and intangible assets from recent acquisitions, combined with declining revenues and heightened competition from small, hyper-local, and independent brands, raise the likelihood of impairment charges and balance sheet stress, ultimately dragging down reported earnings.

Valuation

• The assumed bullish price target for Waldencast is $5.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Waldencast's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $5.0, and the most bearish reporting a price target of just $2.4.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $441.0 million, earnings will come to $24.7 million, and it would be trading on a PE ratio of 32.5x, assuming you use a discount rate of 9.6%.
• Given the current share price of $1.8, the bullish analyst price target of $5.0 is 64.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.