Nu Skin Enterprises, Inc. Price Target Upped By JPMorgan

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Analysts at Stifel and Deutsche Bank also weighed in on Nu Skin’s latest earnings report

Nu Skin released its latest earnings report last week, and Wall Street was pretty impressed, as investors pushed the company’s shares higher. The stock ended the week up by 4.08% at $52.76 per share at the end of regular trading hours on Friday.

JPMorgan raises price target for Nu Skin

In a report dated Feb. 6, JPMorgan analyst John Faucher, Sofya Tsinis and Peter Grom noted that Nu Skin’s sales were weak but added that they were will better than expected. As a result, they slightly increased their earnings per share estimates for this year and next, bringing 2015’s full year estimate to $3.86 per share and 2016’s estimate to $4.24 per share.

The JPMorgan team also bumped up their price target for Nu Skin from $50 to $53 per share and maintained their Neutral rating on the company’s stock. They said the company’s fundamentals remain difficult and that we are still several quarters away from the launch of new products.

The good and the bad from Nu Skin’s earnings report

Nu Skin posted a 42.3% year over year decline in sales, which the JPMorgan analysts say was the year’s most difficult comparison. North Asia was the only region that didn’t outperform their expectations. Earnings per share were 85 cents, compared to the consensus estimate of 82 cents per share.

On the other hand, the JPMorgan team thinks Nu Skin management isn’t convinced that the improving trend in Mainland China is sustainable. Sales in the region rose 2% year over year. Also they don’t think the multi-level marketing company will increase its share repurchases anytime soon even though it resumed its share buyback activity.

Additionally, they pointed out that guidance for the current quarter was lower than consensus estimates, making this the second consecutive quarter in which Nu Skin disappointed on guidance.

Nu Skin must prove its worth

In another report dated Feb. 5, Deutsche Bank analysts Bill Schmitz and Faiza Alwy said they have maintained their Buy rating and $65 per share price target on Nu Skin. They believe the company has one of the best risk / reward profiles in its group but that it still must prove this.

They also think the worst is over despite the regulatory overhang in the U.S. and that year over year growth will resume again in the second quarter of this year.

Their upside thesis is based on continued recovery in China and what they see as a “virtuous cycle of innovation.” Cash Flow inflection and upside to earnings in spite of headwinds from foreign exchange rates also support their upside thesis.

The Deutsche Bank team also stated that Nu Skin stock isn’t for the “faint of heart.”

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