Herbalife Ltd. (HLF) Price Target Upped By Ramey After SEC File Closed

Herbalife Ltd. (HLF) Price Target Upped By Ramey After SEC File Closed

Herbalife shares climbed today after the company released a series of letters suggesting that the Securities and Exchange Commission has wrapped up its investigation. Because regulators closed their file on the multi-level marketing company, notorious Herbalife bull Tim Ramey of Pivotal Research increased his price target from $80 to $90 per share.

Play Quizzes 4

Indeed, the news is possibly good for investors who are long on Herbalife, although this certainly doesn’t mean that the cacophony raised by short-sellers like Bill Ackman and his camp will cease.

SEC is satisfied with Herbalife’s filings

Herbalife released a number of documents today showing that the SEC had finished reviewing its filings. The letter stated, “We have completed our review of your filings.”

How Value Investors Can Win With Tech And “Fallen” Growth Stocks

Valuation Present ValueMany value investors have given up on their strategy over the last 15 years amid concerns that value investing no longer worked. However, some made small adjustments to their strategy but remained value investors to the core. Now all of the value investors who held fast to their investment philosophy are being rewarded as value Read More

In all there were six letters, according to Ramey, pertaining to the company’s language and disclosures in its 2013 and 2014 10-K filings. He (apparently) thinks all will be smooth sailing for Herbalife from here on out.

The analyst wrote, “The closure letter on May 27th makes it clear that the SEC is satisfied with its review of the 2013 and 2014 documents.”

One thing that isn’t in Ramey’s report is the next sentence in the letter, which states:

“We remind you that our comments or changes to disclosure in response to our comments do not foreclose the Commission from taking any action with respect to the company or the filings and the company may not asset staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.”

Of course this could be a pretty standard statement in these sorts of letters because the government likes to leave doors open on the off chance that something might change in the future. Ramey’s not worried at all about it, and he’s perhaps one of the best-informed analysts when it comes to Herbalife.

SEC reviews some issues

Ramey does note that there were five problems related to the disclosures in Herbalife’s filings. They were the permanent injunction ruling in California from 1986, questions about retail sales, the Terelli agreement, the company’s compensation plan in China and the charges against Pedro Cardozo in Brazil.

The analyst calls these issues the “hit list of the infamous antagonist” and states that Herbalife answered regulators’ questions about these issues “to SEC staff satisfaction.” Further, he wrote that he found the charges filed against Cardozo “amusing,” as they had to do with “something about 1000, a carnival and $2,300.”

Herbalife shorts expected to respond

“Go read the December 15th response for the particulars but it was, like many of the charges against Herbalife made by the short community—ridiculous upon close scrutiny,” Ramey added.

The analyst noted that short-sellers are probably going to respond to Herbalife’s release of the documents. There are other agencies investigating the multi-level marketing company, business practices and trades involving its stock. However, Ramey thinks that just like the SEC didn’t find anything interesting, the other agencies won’t either.

The analyst thinks his $90 per share price target is still too low for Herbalife because it has been consistently growing sales. He said the biggest risk is that the growth gap this year “is the new normal,” although he doesn’t think it is. Currently Herbalife is dealing with its new marketing plan and currency headwinds, which are affecting every major U.S. company.

As of this writing, shares of Herbalife were up 3.41% at $55.82 per share.

Updated on

Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she 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. Email her at Mjones@valuewalk.com.
Previous article An Ode To Kirk Kerkorian: Fade To Black
Next article Is India The Next China? [Chart]

No posts to display


  1. HLF will win against Ackman’s reckless bet.

    SEC is satisfied with Herbalife’s filings!!!

    Ackman’s unethical market manipulation tactics deserves Financial Losses and Jail Time – imo.

    Good article Michelle Jones :)

  2. I hope Herballife and their investors file a multi-billion lawsuit against Ackman for business interference and stock fraud. We need to start seeing cases like these filed to stop these thieves from raiding corporate and investor capital.

Comments are closed.