7 May

Could Herbalife Stock’s Bullishness Continue?


Stock price movement

Herbalife Nutrition (HLF) stock has followed a strong uptrend due to improving fundamentals. Herbalife rose ~41% in 2017, and 2018 has turned out to be another great year for the stock, which had risen ~64% YTD (year-to-date) as of May 4. Herbalife reported its 1Q18 results on May 3.

Given the strong stock run so far this year, activist investor Bill Ackman, who once called Herbalife a pyramid scheme and betted against the stock, exited his short position against Herbalife. In comparison, the S&P 500 (SPX) has been roughly flat YTD, and peers USANA Health Sciences (USNA), Nu Skin Enterprises (NUS), and The Vitamin Shoppe (VSI) have risen 47%, 11%, and 3%, respectively.

Could Herbalife Stock’s Bullishness Continue?

Factors supporting Herbalife stock

The graph shows that Herbalife stock has been on a strong bull ride this year. Can we expect more?

Whereas the company’s key China business remains volatile, and market weakness persists in Mexico and South and Central America, Herbalife’s successful US business transition is expected to boost its stock.

Herbalife’s US business, which was impacted by transitioning according to its FTC (Federal Trade Commission) settlement, returned to growth sooner than expected. Meanwhile, the company is upbeat and expects to sustain growth in future quarters. Strong performance in the Asia-Pacific and EMEA (Europe, the Middle East, and Africa) regions, healthy sales and earnings outlook for 2018, new product launches, and better-than-expected 1Q18 results have also boosted investors’ confidence in the stock.

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