Last Update 21 Feb 26

WALD: Future Margin Recovery And Distribution Gains Will Support Share Rebound

Analysts have held Waldencast's price target at $3.00, with the latest updates reflecting lower assumed profit margins and a higher future P/E multiple, while incorporating mixed recent research that includes a Buy initiation and a prior downgrade after "disappointing" Q2 results and a reduced FY25 outlook.

Analyst Commentary

Recent commentary around Waldencast reflects a split view, with some focusing on long term brand potential and others zeroing in on execution hiccups and trimmed outlooks. Here is how that tension is showing up in research and what it can mean for valuation and growth expectations.

Bullish Takeaways

Bullish analysts highlight the Buy rating as a signal that, even after recent estimate resets, they still see the current share price as reasonable relative to the long term earnings power implied by the $3.00 target.
The assumption of coverage with a positive stance suggests some confidence that margins and growth can improve over time from the levels reflected in the latest, more conservative assumptions.
Bullish analysts appear willing to look through recent volatility in quarterly results and outlook revisions. They focus instead on the potential for the portfolio to support a higher future P/E if execution improves.

Bearish Takeaways

Bearish analysts point to the "disappointing" Q2 results, which fell short on both revenue and earnings, as a sign that execution risk is still high relative to what is implied in the current valuation.
The company reduced its FY25 outlook again, which raises questions about visibility into growth and profitability and may justify more cautious assumptions in models.
Milk, previously the faster growing brand, has been pressured by out of stocks and tough comparisons to last year's product launches. This suggests that growth is not yet consistent across channels even with distribution through partners like Ulta Beauty and Amazon Premium Beauty.
For more cautious analysts, the unchanged $3.00 target after weaker results and a downgraded rating signals that upside is now seen as more limited unless the company can show clearer progress on stable growth and margin execution.

What's in the News

Obagi Medical, part of Waldencast, partnered with Alpha Aesthetic Partners on the Aesthetics Leadership with Obagi's Hyaluronic Acid (ALOHA) Program, a multi site evaluation of Obagi saypha MagIQ across Alpha's network to generate real world evidence on clinical performance and patient experience (Client Announcements).
The ALOHA Program will collect standardized data across Alpha practices. Initial findings are planned for presentation at the upcoming Alpha Summit and at industry conferences, focusing on outcomes from integrating Obagi's first FDA approved injectable hyaluronic acid filler into clinical settings (Client Announcements).
Waldencast reported a loss on impairment of goodwill of US$152,018,000 for the three months ended June 30, 2025 (Impairments/Write Offs).
Waldencast updated its 2025 earnings outlook, indicating that Obagi Medical is tracking in line with expectations and that Milk Makeup has a moderated outlook due to softer consumption and continued brand investment. Net revenue is now expected to be broadly in line with 2024 (Corporate Guidance).

Valuation Changes

Fair Value: Held steady at $3.08 per share, with no change between the prior and updated estimate.
Discount Rate: Discount rate is effectively unchanged, moving slightly from 9.62% to 9.61%.
Revenue Growth: Long term revenue growth assumption remains stable at about 6.31% a year in both the prior and updated view.
Net Profit Margin: Net profit margin assumption has fallen significantly, from roughly 6.08% to about 4.02%.
Future P/E: The assumed future P/E multiple has risen meaningfully, from about 23.4x to roughly 34.5x, while the fair value estimate remains unchanged.

Strong growth in Milk Makeup and Obagi Medical, with store expansion and innovation driving increased future revenue and market share.
Operational efficiencies and improved cash flow enhance financial flexibility, allowing for further sales and marketing investments, boosting top-line growth.
Regulatory investigation, macroeconomic factors, and strategic execution risks challenge Waldencast's liquidity, revenue growth, and profitability, requiring careful management and optimization of strategic initiatives.

Catalysts

About Waldencast

Operates in the beauty and wellness industry in the United States, Canada, Europe, the Middle East, India, Australia, and New Zealand.What are the underlying business or industry changes driving this perspective?

Strong growth in both Milk Makeup and Obagi Medical brands, with Milk Makeup expanding into Ulta Beauty stores, leading to expected mid-teens revenue growth. This channel expansion is likely to drive increased future revenue.
Operational efficiencies and sturdy gross margins facilitated by the Waldencast flywheel effect are expected to provide room for further investments in sales and marketing, aiding top-line momentum, thus impacting future net margins positively.
Successful execution of innovation strategies, including new product launches in both the skincare and makeup segments, are likely to boost future revenue and market share.
Securing a new $205 million, 5-year credit facility extends debt maturity and enhances financial flexibility, potentially improving future earnings by reducing financial risks.
Expected improvements in cash generation following the resolution of nonrecurring regulatory expenses will enable stronger cash flow, which could be utilized for growth investments or debt reduction.

Waldencast Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Waldencast's revenue will grow by 10.2% annually over the next 3 years.
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 $20.6 million (and earnings per share of $0.17) by about September 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 analysts price target, the company would need to trade at a PE ratio of 27.6x on those 2028 earnings, up from -3.9x today. This future PE is greater than the current PE for the US Personal Products industry at 22.1x.
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 9.94%, as per the Simply Wall St company report.

Waldencast Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Waldencast's ongoing regulatory investigation has resulted in significant cash usage for nonrecurring expenses, potentially limiting liquidity and impacting net earnings until the matter is resolved.
The macroeconomic environment and retail inventory adjustments have led to slowed market growth and could affect revenue growth, especially as competitive and consumer market conditions may change unpredictably.
The aggressive expansion into Ulta may cannibalize existing sales from Sephora, leading to dilution of revenue per outlet and potentially reducing overall profitability if not managed carefully.
There is execution risk associated with Milk Makeup's strategic plans, especially as they expand into the complexion category and seek to maintain strong brand equity through new innovation, potentially affecting profit margins if the innovations don't meet market expectations.
Significant reliance on growth strategies such as marketing investments and international expansion requires careful management of operational costs and investment returns, which, if not optimized, could lead to stagnation in EBITDA margin improvement and overall net profit growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $3.5 for Waldencast based on their expectations of its future earnings growth, profit margins and other risk factors. 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 $2.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $366.9 million, earnings will come to $20.6 million, and it would be trading on a PE ratio of 27.6x, assuming you use a discount rate of 9.9%.
Given the current share price of $1.49, the analyst price target of $3.5 is 57.4% 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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Expansion Into Ulta Beauty Stores Will Boost Future Success