Canaccord Genuity released a research note today reiterating their Buy rating on Herbalife Ltd. (NYSE:HLF), arguing that the $10 a share haircut the stock took yesterday on the release of Senator Markey’s letter to the FTC was way overblown. They highlight the very strong fundamentals of Herbalife, and say Herbalife’s MLM marketing methods have been investigated in the past and ultimately determined to be legal. Canaccord analysts Scott Van Winkle and Mark Sigal make the bull case for the stock, saying saying strong global sales will “continue to drive double-digit revenue and earnings growth.”

Lobbying win for Ackman’s Pershing Square

No matter how you spin it, Sen. Markey’s letter to the FDA requesting an investigation of Herbalife Ltd. (NYSE:HLF) is a lobbying win for Bill Ackman and Pershing Square, who have a long-standing short position in Herbalife. However, while Sen. Markey’s letter may have let the air out of the outward momentum of the stock, the strong fundamentals remain unchanged and the Canaccord analysts expect the upward momentum to return in a few days after the smoke clears.

Sen. Markey simply doesn’t get it

According to the research note, Sen. Markey simply doesn’t understand (or want to understand) Herbalife Ltd. (NYSE:HLF)’s MLM business model. The analysts point out that Markey has been subjected to anti-Herbalife lobbying efforts from a range of organizations including Ackman’s Pershing Square. They summarize their position by saying “…we suspect the FTC is much further educated onmulti-level marketing (MLM) and Herbalife than the political targets of lobbying efforts are.”

Herbalife’s impending share buyback

The Herbalife Ltd. (NYSE:HLF) research note also highlights the fact that the company has promised a stock buy back, but held off on executing it to date. They give Herbalife management credit for waiting, and argue management is likely to pull the trigger on the stock buy back plan in the near future. “While many investors have wondered why the long-expected leveraged buyback hasn’t occurred yet, waiting was likely the best avenue given recent share price weakness and the greater accretive impact a repurchase offers at current levels.”

Herbalife Price Chart