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D.A. Davidson Reiterates Buy Rating, $72 PT on Herbalife Ltd.

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In a report published Friday, D.A. Davidson & Co. reiterated its Buy rating and $72.00 price target on Herbalife Ltd. (NYSE: HLF).

D.A. Davidson noted, “We were attentive to the 210-minute presentation launched today by Bill Ackman, of Pershing Square, who is short Herbalife shares and describes himself as being the majority of the 20.7 million shares sold short. That would put the short bet in the $400 million-plus range – certainly not insignificant – and, in his words, only his second large short position of his life. Mr. Ackman, if nothing else, did an enormous amount of work on this short idea and presented it in a very organized way. The central thesis of Ackman's claim is that Herbalife is a fraudulent and illegal pyramid scheme. There are dozens of slides that are used to support the claim, but the central thesis seems to be that the compensation in royalties and overrides paid to the top distributors – which are very clearly linked to a volume point of product sales – is actually a payment for recruiting. We disagree and we suspect the company has multiple logical arguments should it ever need to defend itself to regulators.”

Herbalife Ltd. closed on Thursday at $33.70.

Posted-In: D.A. Davidson & Co.Analyst Color Reiteration Analyst Ratings


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