Nu Skin Enterprises, Inc. (NUS): Analysts Still Split

Nu Skin Enterprises, Inc. (NUS): Analysts Still Split

Nu Skin Enterprises, Inc. (NYSE:NUS) posted a big earnings miss on Wednesday, and analysts are taking a wait and see approach, while others are charging ahead. In other words, the bulls are still quite bullish in spite of the results, while the bears have even more reason to be bearish.

Nu Skin sales worsen in China

In a note dated Aug. 5, 2014, Canaccord Genuity analysts Scott Van Winkle and Mark Sigal maintained their Hold rating on Nu Skin. They note that the company actually missed its guidance for earnings per share by about 10%, posting $1.13 per share. Management had guided for earnings of around $1.25 per share. The company reported $650 million in revenue, compared to management’s guidance of $700 million.

WSJ Techlive: IPO, SPAC Or Direct Listing? The Path To Going Public

investThis year has been a record-breaking year for initial public offerings with companies going public via SPAC mergers, direct listings and standard IPOS. At Techlive this week, Jack Cassel of Nasdaq and A.J. Murphy of Standard Industries joined Willem Marx of The Wall Street Journal and Barron's Group to talk about companies and trends in Read More

Of course China was the big problem in Nu Skin’s earnings results. Sales in the Greater China region were $230 million, which was about 25% below the Canaccord Genuity estimate. That marked another 18% sequential deceleration and a 12% year over year decline. In addition, Nu Skin reported softening distributor metrics, posting an additional 16% sequential decline in active distributor and sales leader counts. The company did halt recruitment for some time due to an investigation by the Chinese government. The analysts note that in the other regions, the company did show consistent and modestly favorable results.

Nu Skin’s guidance for the second half also wasn’t great. The company guided for earnings per share that are about 30% below the Canaccord Genuity team’s estimate. The full year estimate was about 20% under their estimate of $5.10, which was already one of the lowest estimates on Wall Street. The analysts said they’re waiting for more visibility on the resumption of distributor activity in China before becoming more constructive on Nu Skin.

Still looking for Nu Skin’s dawn

In another note dated Aug. 6, Deutsche Bank analysts Bill Schmitz Jr. and Faiza Alwy maintained their Buy rating and $70 per share price target on Nu Skin. They still see a bright future ahead for the company, but they say that for now, difficult comparisons and regulatory overhang are still weighing on the company’s shares. They note of course that the worst problems are in China now, as the company must work through extra inventory there and refinance its debt in a way that is shareholder friendly. They’re not giving up though because next year will hold easier comparisons for the company.

The Deutsche Bank team says “the pain trade is sticking around” but that they still think Nu Skin has better days in China ahead of it. They cited “innovation pipeline, high touch, assisted sale model and compelling distributor earnings” as being positive drivers heading into next year’s easier comparisons.

Updated on

No posts to display