Nu Skin Enterprises, Inc. (NYSE:NUS) has taken a hit today after analysts at Bank of America Merrill Lynch downgraded the company from Neutral to Underperform. Also on Thursday, Nu Skin entered into oversold territory.
Nu Skin downgraded
The Bank of America team also reduced their price target for Nu Skin to $63 per share. The firm cited problems in China, which the company has said is one of its most important markets. The nation is Nu Skin’s fastest growing market, after all. According to the analysts, Nu Skin is seeing falling covenant clearance. They also said the multi-level marketing company is having problems with higher fixed costs in China.
The analysts also cited bad feedback in a recent survey of direct selling marketers and problematic comparisons in the previous quarter.
Nu Skin goes oversold
Also this week, Forbes and Benzinga reported that Nu Skin became oversold. That’s a measurement of the relative strength index. If that index slumps under 30, a stock is considered to be oversold. This week Nu Skin’s RSI reached 29.3. Dividend Channel reports that the average RSI of the dividend stocks it covers is 50.8. The firm also states that the company is in the top 25% of its coverage universe.
Some investors may see Nu Skin in a positive light because it is oversold. They may think that the bears may be starting to get exhausted with all their selling and so start looking for opportunities to get into the stock. And then there’s the fact that as a stock’s price falls, dividend investors may be interested in getting in because they’ll see higher yields. Dividend Channel estimates a 2.04% annual yield.
Also in spite of Bank of America’s downgrade, Benzinga reports that other analysts have revised their earnings estimates higher. They say in the last two months, there has been one estimate revision higher, and consensus estimates for Nu Skin have also been trending upward over the last couple of months.