Analysts remain on sidelines
Herbalife Nutrition (HLF) sustained its growth momentum in 1Q18 and reported strong results. The company’s top line benefited from strong EMEA (Europe, the Middle East, and Africa) and Asia-Pacific market growth, primarily in India and Indonesia. The company returned to growth in its US business, which is a big positive. Going forward, Herbalife’s top line is expected to grow healthily in future quarters, reflecting improved Asia-Pacific and EMEA performance and favorable currency rates. Also, US volumes are expected to improve.
The company’s new product launches have resonated well with consumers and are expected to support its net sales growth. Herbalife’s bottom line is also projected to grow healthily in 2018, driven by higher sales, improved margins, and a lower tax rate and share count. However, volatility in China and continued softness in Mexico and South and Central America are expected to restrict top-line growth. Increased interest expenses due to higher debt could also be a drag.
Ratings and target price
Of the analysts covering Herbalife stock, ~60% recommended “hold,” and 40% recommended “buy.” Their price target of $119 implies a 7.2% upside based on Herbalife’s May 4 closing price of $111. Most analysts covering USANA Health Sciences (USNA), Nu Skin Enterprises (NUS), and The Vitamin Shoppe (VSI) also have a neutral outlook.