Have a $32.00 target. GLTA
EQUITY RESEARCH
JAMIESON WELLNESS INC
Q3/F23 Preview: Checking In On Consumer Health
Jamieson Wellness will report its Q3 results on Thursday, November 2 after
market close. Management will host a conference call at 5:00 p.m. ET; dial-in
number is 1-855-327-6837.
We consider 2023 a transition year with potential for more volatility than has
been traditionally associated with this business. We believe this dynamic, as
well as heightened leverage (and low FCF conversion) and questions about
consumer spending, have weighed on the stock, which is -33% YTD.
Sales guidance for Q3 involves: up to a 5% sales decline for Jamieson
Canada (lapping +11.7%), 50%-70% growth for Jamieson China (which now
includes the distribution portion of sales), 10% decline for Strategic Partners,
and 5%-15% growth for Jamieson International and 40%-50% increase in
youtheory (U.S.) sales. Consolidated GM% is expected to be ~35.4%
because of lower margins from youtheory. Guidance for SG&A in Q3 is for an
increase of 15%-18%; note that youtheory was included for ~75% of Q3 last
year. Health Canada data shows domestic flu count up 24% Y/Y, but Q3 is a
relatively soft quarter, so we expect virtually no positive impact.
After a reduction to full-year guidance in Q2, we believe a possibility exists
that guidance will be reduced for Q4, at least for Canadian branded sales.
Point-of-sale growth in Q3 was strong at +8% (half from price, half from
volume/mix), but reaching the full-year guide of +2% to +4% revenue growth
for that segment requires high-single-digit growth in Q4 (on top of +6.3% LY)