Nu Skin: Disregard The Noise; Balance Sheet Looks Impressive, says DB

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Deutsche Bank analysts Bill Schmitz Jr, Faiza Alwy and Nicholas Cavallo rate Nu Skin Enterprises, Inc. (NYSE:NUS) as a Buy as Nu Skin’s stock slides but balance sheet remains attractive.

Nu Skin is a multilevel marketing company that develops dietary supplements and personal care products.  Their stock price recently hit a 52-week high at $140.50 a few days ago.  Like Herbalife Ltd. (NYSE:HLF), Nu Skin received some good news when it was revealed that the FTC is targeting its competitors, and not itself, for investigation.

Nu Skin’s business practices in question

People’s Daily article unfounded, pullback creates buying opportunity Nu Skin Enterprises, Inc. (NYSE:NUS) is trading down sharply today on an article in the Chinese newspaper People’s Daily, questioning the legitimacy of its business practices in China, the latest in a series of attacks on the company, particularly as it relates to its Chinese business. While the translation of the article is admittedly choppy, it appears to focus on issues that we view as largely inconsequential to the company’s ultimate success in the Chinese market, noting that Nu Skin has responded to the article by saying it contains inaccuracies and exaggerations that are not representative of its business in China.

Further, many sources on the ground in Asia have suggested that this news source has a history of attacking various other companies, and we note that this is the third negative article on Nu Skin Enterprises, Inc. (NYSE:NUS) in a row (from various sources) that has been published the week of options expiry. We view today’s pullback as a buying opportunity, noting that we are meeting with management tomorrow in Hong Kong and will follow up with details post our meetings. Risk to estimates remains to the upside and the pristine balance sheet provides significant optionality, supporting our Buy rating and $150 target.


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