Herbalife Ltd. (NYSE:HLF), the multilevel marketing (MLM) company that sells nutritional and weight loss management products, reached a new all-time high on a report that the company is not included in the latest enforcement crackdown launched by the Federal Trade Commission (FTC) against companies selling weight loss management products.
The stock price of Herbalife Ltd. (NYSE:HLF) climbed to as much as $83.50 per share today. At the time of this writing, around 2:10 PM in New York, the stock is trading at about $81.68 per share, up by more than 2%.
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Last week, the FTC announced that it would disclose the details of its enforcement action against companies that are advertising false claims regarding the benefits of weight loss products. At that time, the shares of Herbalife Ltd. (NYSE:HLF) fell due to speculations that it was among the companies targeted by the agency.
There had been numerous calls on the FTC to launch an investigation against Herbalife Ltd. (NYSE:HLF) particularly from activist investor Bill Ackman of Pershing Square Capital Management, different Latino organizations, and even politicians on allegations that its business model is a pyramid scheme. Herbalife Ltd. (NYSE:HLF)’s management denied the allegations.
FTC actions against Sensa, L’Occitane, LeanSpa
Sensa, L’Occitane, LeanSpa were among the companies identified by the FTC that violated regulations by advertising false claims regarding the benefits offered by their products.
Sensa claimed that consumers will lose weight by simply sprinkling its product on their food. Sensa agreed to settle the agency’s complaint and agreed to pay $26.million for consumer refunds. L’Occitane also agreed to settle the case.
The agency said LeanSpa agreed to a partial settlement on a fourth case filed against it. The company allegedly deceived consumers by promoting its acai berry and colon cleanse weight loss supplement through fake news websites.
Herbalife receives bullish recommendation
Meanwhile, Herbalife Ltd. (NYSE:HLF) received a bullish recommendation from Zacks Equity Research. According to the firm, the company has “few catalysts and strong support from the analyst community” and noted that it was able to beat the EPS estimates over the past 29 consecutive quarters.