Stock Update (NYSE:HLF): Herbalife Ltd. and the Federal Trade Commission Reach Settlement Agreement

Herbalife Ltd. (NYSE:HLF) announced it has reached a settlement agreement with the Federal Trade Commission (“FTC” or the “Commission”) resolving the FTC’s multi-year investigation of the Company. The terms of the settlement do not change Herbalife’s business model as a direct selling company and set new standards for the industry. With the settlement agreement announced today, the FTC’s investigation of Herbalife is complete.

Herbalife and the Illinois Attorney General also reached a settlement, and the Company agreed to pay $3 million as part of this separate agreement. With the conclusion of the Illinois investigation, the Company is not aware of any active investigations by any other state attorney general.

“The settlements are an acknowledgment that our business model is sound and underscore our confidence in our ability to move forward successfully, otherwise we would not have agreed to the terms,” stated Michael O. Johnson, chairman and CEO, Herbalife.

While the Company believes that many of the allegations made by the FTC are factually incorrect, the Company believes settlement is in its best interest because the financial cost and distraction of protracted litigation would have been significant, and after more than two years of cooperating with the FTC’s investigation, the Company simply wanted to move forward. Moreover, the Company’s management can now focus all of its energies on continuing to build the business and exploring strategic business opportunities.

The Company’s Board of Directors (“Board”) unanimously approved the settlements and voluntarily established an Oversight Committee of the Board (“Committee”) that will ensure full compliance with the terms of the agreement. The Board also appointed Henry Wang, presently Deputy General Counsel and Chief Compliance Officer, to lead the Company’s implementation efforts, reporting directly to the Committee on these matters. Additionally, Pamela Jones Harbour, currently Senior Vice President of Global Member Practices and Compliance and former FTC Commissioner, was appointed to oversee implementation of new distributor compliance initiatives. (Original Source)

Shares of Herbalife closed yesterday at $59.36, down $0.05 or -0.08%. HLF has a 1-year high of $66.26 and a 1-year low of $42.26. The stock’s 50-day moving average is $59.62 and its 200-day moving average is $56.07.

On the ratings front, Herbalife has been the subject of a number of recent research reports. In a report issued on May 6, Suntrust Robinson Humphrey analyst Michael Swartz maintained a Hold rating on HLF, with a price target of $66, which represents a potential upside of 11.2% from where the stock is currently trading. Separately, on the same day, Pivotal Research’s Timothy Ramey maintained a Buy rating on the stock and has a price target of $90.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Michael Swartz and Timothy Ramey have a total average return of -9.6% and 7.4% respectively. Swartz has a success rate of 22.2% and is ranked #3404 out of 4060 analysts, while Ramey has a success rate of 65.6% and is ranked #597.

Herbalife Ltd. is a global nutrition company. It offers range of science-based weight management products, nutritional supplements and personal care products intended to support a healthy lifestyle. The company’s products are categorized into four principal groups: weight management, targeted nutrition, energy, sports & fitness and outer nutrition. Its weight management products include meal replacement, protein shakes, drink mixes, weight loss enhancers and healthy snacks and its Outer nutrition products include facial skin care, body care and hair care.


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