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Herbalife Ltd. (HLF) Stock Continues to Drop Though Mgmt Remains Optimistic

By Howard Kim 

Year-to-date, shares of Herbalife Ltd. (NYSE:HLF) have dropped 43 percent; in early March the stock had hit a low of nearly $30. Analyst Meredith Adler from Barclays weighed in on the stock following a visit to China and a meeting with the senior management team.

Yesterday, Adler maintained an Overweight rating for the stock with a price target of $73. Based on her interaction with Herbalife’s management team and talks with members of nutrition club, she feels the company is comparatively less impacted by China’s economic woes, as opposed to other multi-level marketing firms.

Adler says, “We see the company being able to continue growing its business in China at a healthy pace.” After her visit, Adler has not changed her existing forecast of 32 percent of local currency growth in Q315 in China, and 25 percent local currency growth in both 4Q15 and FY16.

The analyst noted, “Herbalife has an experienced management team” with a service-oriented business. The company is placing newfound importance on “attracting and retaining members” over “the recruitment of new sales representatives.” Management is optimistic and confident that there are “still ample opportunities to open nutrition clubs throughout the country.” The company is driven by “the desire to [combat] the growing obesity problem” and is now focusing on “encouraging physical activity to support weight loss through the sponsorship of 5K runs and fitness camps.”

Meredith Adler has a 53% overall success rate recommending stocks with a +0.7% average return per rating when measured over a one-year horizon and no benchmark.

Out of 4 analysts polled by TipRanks who have recently rated Herbalife, 3 have rated it as Buy, while 1 has rated it as Hold; none of the analysts have recommended to Sell the stock. The average consensus price target for Herbalife is $71.22 (an upside of 28% over current levels).