- "Herbalife (HLF -0.8%) has long taken a cautious and measured approach to growing its mainland China segment that allows it to better manage its operations and salespeople," says analyst Scott Van Winkle, reiterating his Buy rating and $87 price target following the Nu Skin (NUS -8.1%) blow-up. "Its China compensation model differs from NUS and is consistent with the model utilized by other direct sellers in the market."
- China accounts for about half of Herbalife sales and maybe half of that much as a percent of profit, adds Van WInkle, so the shares are overly discounting any perceived risk at this point.
- The selloff may also prompt the company to accelerate its buyback program sooner rather than later, suggests Van Winkle, noting about $1B of cash on the books at the end of the year. "We continue to expect strong Q4 results will also serve as a positive catalyst when reported next month and recommend buying HLF on yesterday’s share price weakness."
- USANA (USNA +0.4%)
Herbalife defended at Canaccord
Jan 17 2014, 14:45 ET