Disruptive Investor
Long/short equity, Deep Value, event-driven, macro

Medifast: Steep Growth Target Can Be Company's Undoing

Medifast (NYSE:MED), which primarily engages in the production, distribution, and sale of weight loss products, has set an optimistic revenue target of $1 billion by 2017 from FY12 revenue of $357 million. Achievement of the target growth would imply revenue CAGR of 23% over the next five years. This investment note discusses the possibility of achieving this target considering the company's growth strategy and its implications for the company's stock. Based on the arguments presented below, I am of the opinion that the company will disappoint on the growth front and the stock will be a victim of over optimism.

Talking about over optimism, Weight Watchers International (NYSE:WTW), another company that provides weight management services, slumped...

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