Helen of Troy and NanoString Technologies Trade Set-ups

Key Points

• Helen Of Troy had a better-than-expected quarter, and shares are up double-digits because of it. 
• NanoString Technologies pre-released a solid report and reconfirmed guidance that is now cautious. 
• Both stocks are on the brink of reversals that could add significant upside to their share prices. 

The action is hot in Helen Of Troy NASDAQ: HELE and NanoString Technologies NASDAQ: NSTG. These unrelated companies issued better-than-expected results and guidance that have their shares up double-digits in early trading. The takeaway for traders is that both markets are bottoming on the verge of reversals that offer significant upside potential. 

Helen Of Troy Stands Tall, Reforms Business 

Helen Of Troy has struggled for the last 2 years with supply chain issues, inflation, and the bursting COVID bubble that led to a decline in revenue and earnings and a reduction in outlook from the analysts. The takeaway is that the company continuously outperforms its expectations despite the numerous headwinds, and now growth is coming back into the picture. The FQ1 results are down compared to last year, and the outlook for this year is also negative, but the guidance is better than the market feared, and next year, growth should resume.

Among the many interesting details in the report is that execs see inventory normalization in their end markets, which means normalization of orders and business for Helen of Troy. 

Helen of Troy posted $1.94 billion in net revenue for the quarter, down 6.6% compared to last year. That detail is offset by 1500 basis points of outperformance relative to the analysts' expectations, and there is also margin improvement. The company widened the margin at the gross and operating levels to grow cash flow by triple digits and deliver robust FCF compared to last year’s negative figure. The guidance was reiterated in a range that brackets the consensus, but the market reaction suggests it feared worse. 

The stock jumped more than 5% immediately after the news and extended that gain to over 10% in pre-market trading. The early action shows profit-taking at this level and potential for short-selling, so caution is due. Short-selling was listed near 25% at the last report and may still be a significant headwind for the stock price. If the market can sustain this level or move above critical resistance at $140, it could continue to rally into year-end. The analysts view the stock as a Buy but don’t see much upside, but that may change; however, the institutions bought HELE at a pace of more than 2:1 in the 1st half suggesting the bottom is solid. 

NanoString Technologies: Oversold And Undervalued 

NanoString Technologies manufactures laboratory equipment for the scientific and healthcare fields. Its stock is down 95% from its COVID-inspired highs offering a profound value to traders and investors. The company struggled with growth over the past few years, but that is now behind it.

Execs pre-released Q2 results revealing the 2nd consecutive quarter of YOY growth, an acceleration from the previous quarter, and growth above expectations. The $44 million in projected revenue is up 37% compared to last year; it’s above guidance and more than double the pace of growth in the previous quarter.

NanoString reiterated its guidance along with the news, but that guidance may be cautious, given the Q2 strength. 

NanoString’s 20% rise in share price is partly due to short-covering; the short-interest was listed at 16% in the last report, but also by the analysts.

There are no new analyst revisions yet, and the trend in price targets is downward. Still, the consensus is steady at Moderate Buy, and the lowest price target Marketbeat.com is tracking assumes 200% of upside is available.

The downtrend in the stock is still intact, even with the 20% gain in price action, but bullish factors include the increase in volume with shares at new lows and institutional activity. The institutions own about 95% of this name and have been buying it on balance in 2023.