UPDATE: Deutsche Bank Downgrades Vitamin Shoppe On Disappointing Sales

In a report published Tuesday, Deutsche Bank analyst Karen Short downgraded the rating on Vitamin Shoppe Inc (NYSE: VSI) from Buy to Hold, and lowered the price target from $50.00 to $43.00.In the report, Deutsche Bank noted, “Following a weak 3Q14, we are downgrading VSI to Hold from Buy and reducing our Price Target to $43 – ~7x EV/EBITDA our new FY15 estimates. Our rationale: 1) VSI's 3Q14 missed on the top line and on expenses, 2) the comp guidance for 4Q is disappointing, 3) SG&A in 3Q was very disappointing and FY15 comments indicate higher SG&A will not abate, and 4) FY15 preliminary guidance comments brings our already-below-the-street EPS down by an additional $0.06 (and our reduced EPS factors in an $0.08 benefit from a 4Q14 $50M ASR). We expect the stock to be pressured today and going forward; however, the potential for industry consolidation as well as the ASR may provide some support – but neither one of these factors is compelling enough to keep us at a Buy. Ex the ASR, we forecast only very modest EPS growth in FY15, and in general, we are not proponents of share repurchase-driven EPS growth when fundamentals are deteriorating.”Vitamin Shoppe closed on Tuesday at $45.73.