Honest stock bounces back above IPO price after bullish call by J.P. Morgan

Shares of Honest Co. Inc. bounced back above its initial public offering price in afternoon trading Tuesday, after J.P. Morgan analyst Andrea Teixeira made a bullish call on the health and wellness company founded by Jessica Alba, saying it represented a “highly attractive and unique” growth opportunity. Teixeira initiated Honest at overweight and with a stock price target of $18, which is 9.1% above current prices. The stock was up 4.6% at $16.50, putting it on track for just the sixth close above the $16 IPO price since the company went public on May 5, and the first close above it in six sessions. The company is a “pure-play focus” in the clean and natural market, digital foundation, growing distribution footprint and the potential to expand internationally,” Teixeira wrote in a note to clients. “As such, we think there is a relatively high degree of visibility into double-digit topline growth, should translate into an improving profitability profile as the company gains operating leverage across the P&L [profit and loss] on scale benefits.” J.P. Morgan was a lead underwriter of Honest’s IPO. The stock has tumbled 28.3% since it closed at $23 on the first day of trading, while the Renaissance IPO ETF has gained 6.6% over the same time and the S&P 500 has edged up 0.8%.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.