Bank of America Positive on Herbalife's Potential Share Repurchase
Bank of America published a research report on Herbalife (NYSE: HLF) that commented on the company's potential share repurchase.
In the report, Bank of America wrote, "Following the Q1 conference call when Einhorn first raised the questions, HLF increased disclosure of its compensation and consumption metrics to address market concerns around the sustainability of its multi-level marketing (MLM) business model. HLF notes that qualifying volume from new sales leaders accounted for just 14% of company volume in 1H12, down 2pts from 2011 levels, and close to half of 2007 levels, as volume increasingly shifts toward the nutritional club format of distribution (the three main products consumed at nutrition clubs now account for 52% of company volume). The low percentage of sales from distributors qualifying as new leaders contests a common criticism that the majority of sales at MLMs come from new distributors."
Bank of America maintained its Buy rating and $65 price objective on Herbalife, which is currently trading down 0.64 percent from Tuesday's $45.61 closing price.
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