Analysts at D.A. Davidson & Co. noted that Asia is the primary driver of the out-performance of Herbalife Ltd. (NYSE:HLF) as well as other multi-level marketing (MLM) companies such as Nu Skin Enterprises, Inc. (NYSE:NUS) and USANA Health Sciences, Inc. (NYSE:USNA).
Rise in Herbalife Stock Price
The stock price of Herbalife Ltd. (NYSE:HLF) rose by 40.2 percent, Nu Skin Enterprises, Inc. (NYSE:NUS) by 60.9 percent, and USANA Health Sciences, Inc. (NYSE:USNA) by 112.5 percent year to date. These three MLM companies beat the performance of the Russell 2000 and Standard & Poor’s with 13.1 percent, and 11.4 percent, respectively. The stocks continue to outperform the market in June, according to DA. Davidson analyst Timothey Ramey.
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Ramey noted that despite the good performance of Herbalife Ltd. (NYSE:HLF) and USANA Health Sciences, Inc. (NYSE:USNA), the stocks of both companies are still heavily shorted. On the other hand, short interest for Nu Skin Enterprises, Inc. (NYSE:NUS) declined by ~7 percent of its outstanding shares.
The analysts said that Herbalife Ltd. (NYSE:HLF) remains the most heavily shorted with ~27 percent of its outstanding shares short while 21 percent of the outstanding shares of USANA Health Sciences, Inc. (NYSE:USNA) are short. Last month, it was reported that hedge fund manager Bill Ackman may have incurred $10 million in losses from his short position in Herbalife. Ackman is shorting 10 million shares of Herbalife.
During its previous multi-city Asian extravaganza, Herbalife Ltd. (NYSE:HLF) recorded 55,000 people attended the event this year, an increase of 22 percent or 10,000 participants from 45,000 last year. Ramey noted that majority of the increase came from Bangkok, Thailand.
According to Ramey, Herbalife Ltd. (NYSE:HLF) continues to demonstrate an impressive organic growth across multiple markets. The company is preparing for the launching of new skin care products in October, and it is planning to expand its Herbalife24 line in 11 new markets in the third and fourth quarter.
USANA Focused on Improving Technology
On the other hand, USANA Health Sciences, Inc. (NYSE:USNA) is focused on improving its technology, and continues its long-term distributor and customer engagement. Early this month, the company announced that customers would receive an iPad integrated with the True Health Assessment and True Companionship app, if they will enroll in the auto-ship program and continued participation.
Ramey believes that the iPad promotion of USANA Health Sciences, Inc. (NYSE:USNA) will help boost the company’s sales going forward. In addition, he observed that the company continues to grow in China, North America, and Columbia. However, sales in Canada are slightly flat due to a 10 percent to 12 percent price cut.
Meanwhile, Nu Skin Enterprises, Inc (NYSE:NUS) is preparing for the launch of its AgeLOC Weight-Loss LTO (limited time offering) in September for Southeast Asia and China. The company will also launch the product in Canada, Europe, Japan, Korea, and the United States in October. The product is rumored to cost $1,000 for a three month supply.