Seeking Alpha

Herbalife defended at Canaccord

  • "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%)
Comments (9)
  • "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." This seems incorrect. According to numerous other sources, HLF mix of Rev's in China is 10%, not 50%. It is NUS who recieves roughly half their rev from China.
    17 Jan, 02:52 PM Reply Like
  • I wonder how much Canaccord bought at $81.
    17 Jan, 03:02 PM Reply Like
  • Another comment from someone who has cost numerous investors lots of capital with incorrect investment advice last year. Sad, and no refunds.
    17 Jan, 07:35 PM Reply Like
  • What about those who shorted at $82? Are they at a loss?
    19 Jan, 01:16 PM Reply Like
  • Any investor knows that blindly following an advisor is not very wise.
    17 Jan, 09:18 PM Reply Like
  • China is not 1/2 of herbalife sales..... Not unless it's grown real fast in the last few months
    18 Jan, 12:45 AM Reply Like
  • I'd keep quiet if I were the raven, you've had a terrible track record over the last year.
    19 Jan, 02:31 AM Reply Like
  • Respectfully, Ive seen many many reports that say that HLF only gets 10-11% of its earnings from China. 80% of their earnings our outside the US, with only 10-11% in China.

     

    Can you site your source?
    19 Jan, 04:11 AM Reply Like
  • davedctill2003: "Can you site your source?"

     

    You can always check Herbalife's latest 10-Q:

     

    http://bit.ly/1cIciA0

     

    ... and search for China
    19 Jan, 08:30 AM Reply Like
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