Analysts prefer a ‘neutral’ outlook
So far, Herbalife’s (HLF) financial performance in 2018 should impress investors. The company’s growth in China rebounded, while US sales have stabilized. Herbalife’s US sales were disrupted due to the business transition following the Federal Trade Commission agreement.
Herbalife raised the fiscal 2018 guidance for worldwide volume point growth, which indicates that the growth momentum will likely be sustained in the coming quarters.
However, unfavorable currency rates pose a threat. Herbalife’s management lowered its sales outlook for fiscal 2018. The company’s top line is projected to increase 8.3%–12.3% in fiscal 2018—down from its earlier guidance of 9.0%–13.0% growth. Negative currency rates are expected to hurt Herbalife’s EPS. Management expects unfavorable currency rates to have a negative impact of $0.13 on its EPS in fiscal 2018.
So far, Herbalife stock has risen 61.5% in 2018, which implies that the stock has been priced in the positives. Herbalife stock trades at 16.9x the fiscal 2018 estimated EPS of 2.84.
Rating and target price
About 60.0% of the analysts covering Herbalife stock maintain a “hold” rating, while 40.0% recommend a “buy.” Analysts have a consensus target price of $63.60, which indicates an upside of 16.3% based on its closing price of $54.69 on September 25.
Besides Herbalife, most of the analysts also maintain a “hold” on other nutritional and dietary supplement manufacturers including Usana Health Sciences (USNA), Vitamin Shoppe (VSI), and Nu Skin Enterprises (NUS).