Are you looking to lose weight? How about to make money selling products that help other people lose weight? Don’t worry, it’s not a pyramid scheme. This week Herbalife Ltd. (NYSE:HLF), the company that sells nutrition, weight management, and skin-care products was exculpated by PriceWaterhouseCoopers and a Belgian court.
A year ago, the company’s stock suffered when activist investor Bill Ackman accused Herbalife of functioning as a Ponzi scheme, but the company’s shares have bounced back following the discovery of the truth. Herbalife’s business model was confirmed as a legitimate form of management and the audit revealed no major financial mistakes. Now that the company is back on its feet, analysts are eager to recommend BUY or HOLD.
Analyst Timothy Ramey of D.A. Davidson wants to thank all the people who doubted Herbalife Ltd. (NYSE:HLF) because they have given the company’s shares a chance to grow. “We’d like to thank Mom, Jesus, and the short sellers. By throwing down the gauntlet to the degree that they did – daring PriceWaterhouseCooper to render a clean audit – they elevated the level of scrutiny to a level of heretofore unheard of. In our opinion, this has paved the way for Herbalife to have a growth stock valuation.” Timothy recommends BUY HLF with a price target of $115 per share. Timothy is ranked 277 out of 2315 analysts and has a 62% success rate of recommended stocks.
SunTrust analyst Michael Swartz also agrees with Timothy, recommending BUY HLF because the audit and court proceedings have only helped the company’s standing. “In of itself, the clean bill of health solidifies our comfort level around HLF’s business model/accounting practices.” Michael also believes that after everything settles HLF will return to its previous value, “With two favorable catalysts in the span of two weeks (including the 12/3 Belgium ruling) we believe the “hair” to the story (i.e. pyramid scheme accusations) has begun to recede. As such, investor attention is likely to revert to HLF’s strong fundamentals/track-record (i.e. surpassing Street estimates 28 of past 29 quarters). Put another way, we see little reason why HLF cannot retrace to its historical valuation range (13-16x).” Michael has a 50% success rate of recommended stocks and a 0.9% average return over S&P-500.
But for analyst John Sam Marco, the audit revealed no new information and, instead of BUY HLF, he recommends HOLD. “The re-audit financials revealed the same, previously disclosed prior-period errors already disclosed in the 10Q’s filed in July and October- in other words, no new news.” John is ranked 1478 out of 2315 analysts and has a -3.9% average return over S&P-500.
