Analyst Spotlight: Pivotal Research’s Take on Herbalife Ltd (HLF)

In a research note published Friday, Pivotal Research analyst Timothy Ramey reiterated a Buy rating on shares of Herbalife Ltd. (NYSE:HLF) with a price target of $90, after the nutritional giant reduced fourth-quarter sales and volume expectations, and disclosed that the SEC has requested documents and information relating to the company’s anti-corruption compliance in China. Herbalife shares are currently trading at $53.25, up $0.11 or 0.21%.

Ramey noted, “First, the fact that 4Q16 sales guidance was weakened even though EPS guidance was unchanged. The company would normally hedge much of the F/X exposure in the current quarter so this is not particularly surprising. However, it is fair to note that 4Q volume is expected to be toward the low end of previously issued guidance of -1.5% to +2.0%. 2017 volume guidance was unchanged at +2%-+5%.”

“Second, the company said: “The SEC has requested from the Company documents and other information relating to the Company’s anti-corruption compliance in China, and the company is conducting its own review.” While this news is not positive, we are not giving it any special weight, at this time. We would be far more concerned if the Chinese were investigating rather than the SEC. Recall that Nu Skin had a similar inquiry resolved in the 3Q for a small fine,” the analyst added.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Timothy Ramey has a yearly average return of 6.1% and a 58% success rate. Ramey has a -0.6% average return when recommending HLF, and is ranked #933 out of 4365 analysts.

Out of the 3 analysts polled by TipRanks, 2 rate Herbalife stock a Hold, while 1 rates the stock a Buy. With a return potential of 47%, the stock’s consensus target price stands at $78.

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