Beauty Health Stock Plunges After Q3 Print: Analysts Take A Deep Dive, Challenges 'More Than Skin Deep'

Beauty Health Co SKIN shares tanked in early trading on Tuesday, after reporting downbeat quarterly results.

The results came amid an exciting earnings season.

Here are some key analyst takeaways from the earnings release.

Benchmark On Beauty Health

Analyst Bruce Jackson downgraded the rating from Buy to Hold.

Beauty Health reported disappointing third-quarter results, lowered its full-year guidance, suspended the targets for 2025 and indicated that “addressing the product issues experienced after last year’s U.S. Syndeo launch would take additional time to address,” Jackson said in his downgrade note.

“The delivery system meant to fix the performance issues with the first-generation product itself was found to have flow issues after 4-6 months in the field,” the analyst stated.

He added that U.S. Syndeo customers have been given the option of a field upgrade or exchanging for a new 3.0 delivery system, “for which the company will take a special charge of $44.4 million plus an inventory write-off of $18.8 million.”

Check out other analyst stock ratings.

Raymond James On Beauty Health

Analyst Olivia Tong downgraded the rating from Market Perform to Underperform.

Beauty Health delivered a “substantial miss and guide down” quarter, Tong stated in the downgrade note. The company’s sales in the Americas declined by 11% year-on-year, and management lowered the 2023 outlook by more than the third-quarter miss, she added.

Beauty Health may need to increase promotions and marketing “to assuage customers who may be more skeptical, especially if they experienced machine issues,” the analyst stated. “In addition, we are mindful of potential macro challenges, particularly as other device makers have cited deteriorating demand for new machines as borrowing costs increase,” she further wrote.

Stifel On Beauty Health

Analyst Jonathan Block reaffirmed a Hold rating while reducing the price target from $8 to $3.

The expectations from Beauty Health were already low “as a slew of aesthetic companies had already preannounced/missed 3Q23 guidance/estimates,” Block wrote in a note.

“While expectations were modest, 3Q23 results missed estimates materially, 2023 guidance was lowered and the LRP was pulled,” the analyst stated.

“Industry headwinds were certainly a challenge, but company-specific issues were prominent as ongoing Syndeo quality control issues continue to plague the company, notably in the United States,” he added.

SKIN Price Action: Shares of Beauty Health had declined by 58.97% to $1.60 at the time of publication Tuesday.

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