Herbalife Ltd. Still Faces Headline Risk, But Fundamentals Strong


Herbalife Ltd. (NYSE:HLF) again released positive quarterly results and even raised its earnings per share guidance for 2014. Wedbush analysts continue to like the company, although they note that its stock continues to bounce around thanks to recent headlines.

Raising estimates for Herbalife

Analyst Rommel Dionisio and his team have maintained their Outperform rating and $90 per share price target on Herbalife Ltd. (NYSE:HLF). They note that the nutritional supplements company raised its 2014 earnings per share guidance because of its aggressive buyback activity and also its convertible note offering.

Management’s new guidance for the current quarter is for between $1.25 and $1.29 per share—a penny higher than previously. Their new guidance for all of 2014 is for between $5.85 and $6.05 per share—up from between $5.45 and $5.65 per share. However, Herbalife Ltd. (NYSE:HLF) lowered its 2014 sales guidance because of foreign exchange rates. The company also maintained its guidance for between 6.5% and 8.5% volume point growth.

In light of these changes, the Wedbush team has raised their earnings per share estimates for the company. Including the accretion from Herbalife Ltd. (NYSE:HLF)’s recent transactions, they increased their 2014 estimates for the company to $6.05 per share from $5.88 per share. However, they left their revenue expectations the same because they had already included foreign exchange rate issues into those estimates.

Herbalife shows “impressive” growth

The Wedbush analysts note that Herbalife Ltd. (NYSE:HLF) continues to show strong broad-based fundamental growth. The nutritional supplements company reported that in spite of the recent headlines, its core business and recruiting trends have remained strong.

They believe that Herbalife Ltd. (NYSE:HLF) will continue going strong this year in spite of the “negative publicity campaign being waged by a prominent short seller,” in other words, Bill Ackman. They note that Herbalife has seen double-digit growth in the Europe and Middle East areas, South and Central America and China, plus high single-digit growth in North America.

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at Mjones@valuewalk.com.

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