BTIG reiterated its Buy rating on Herbalife Ltd. (NYSE: HLF) Friday ahead of its earnings release. The firm maintained a $55 price target.
Analyst April Scee noted that consensus “hasn’t yet adjusted for the increase in Fx pressure since HLF guided on 11/03, but market is braced for a tough Q, Fx impact is well-understood by investors & Herbalife isn’t an outlier on Fx vs. the group.
"A Key metric for 4Q, she added, "is U.S. distributor productivity, where results could reassure relative to fears.”
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Scee estimated a 170 basis point incremental topline drag for the fourth quarter versus guidance given on November 3, along with some emerging market weakness. The company's US segment (which is 20 percent of sales), is "likely improving on lower gas prices/better employment [numbers].”
“As a result, although we adjust estimates down for Fx (we reduce top line 2 percent to $1.2bn for 4Q and 5 percent to $4.8bn for ’15 and EPS 2 percent to $1.30 for 4Q and 5 percent to $5.32 for ’15), we make no other changes vs. our prior model,” according to her analysis.
The analyst note also said it's impossible to time the FTC resolution. Scee concluded: "W e’re confident HLF is not a pyramid scheme.”
Herbalife closed at $31.24 Friday, down 1.53 percent.
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