Barclays Cuts Estimates On Herbalife Due To Forex

Barclays lowered its EPS forecast for Herbalife Ltd. HLF due to concerns over forex.

Analyst Meredith Adler cut the 4Q14 estimate from $1.19 to $0.99 and for FY15 the EPS estimate was lowered from $5.61 to $4.05.

Adler commented that “given the strength of the US dollar against many currencies, including several that are important to HLF, including the Russian ruble, the Brazilian peso, the Euro, and the British pound. Additionally, our outlook for volume and local-currency revenue growth has been revised downward to reflect the impact of the company's efforts to protect its distributors.”

Adler expected “the slowdown to be temporary, with most of the company's efforts likely to put pressure on volume for about a year or so after they are put in place. The various initiatives are being implemented globally at a measured pace, however, which means that the overall slowdown for the company could last longer than 12 months.”

“We believe our new estimates are conservative, yet even at these EPS levels the stock is still very inexpensive, with a FY16 P/E of a mere 7.7x. In our opinion, investors are fully compensated for the risks related to the revenue slowdown,” according to Adler.

The firm maintained an Overweight rating and $64 price target.

Herbalife Ltd. recently traded at $31.39, up 1.23 percent.