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...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
FREESA PRO MEMBERS
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
PRO Top long ideas returned 21.7% in 2016**
"As a PRO member, we get uniquely valuable perspective that go beyond our quantiative analysis... We rely on PRO to get beyond the numbers quickly and add much needed perspective. It keeps me ahead of the next big thing. - Mark Choate, Malaga Cove Capital"
Mark Choate, Malaga Cove Capital
"Contributors (writers and commentators), often have a long history in the secuirities they opine on and some are clearly well positioned industry participants with detailed industry views that can help provide color on where the skeletons are buried in a particular secuirity and/or industry."
Jim Roumell, Roumell Asset Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details