UPDATE: Longbow Research Reiterates On Vitamin Shoppe Following 2Q EPS Beat

In a report published Wednesday, Longbow Research analyst Philip Terpolilli reiterated a Buy rating on Vitamin Shoppe VSI, but lowered the price target from $59.00 to $55.00. In the report, Longbow Research noted, “VSI reported adjusted EPS in line with our estimate, along with more stable comp trends compared to key competitor GNC (NEUTRAL). However, VSI indicated it expects gross margin in 2H14 to come in at the low end of expectations, and plans to increase ad spend in 3Q, likely in an attempt to drive new customer traffic. Gross and operating margin pressure appear near-term in nature, so given top-line strength, we consider yesterdays sell-off to be an attractive entry point. Consolidated revenues increased 9.6% y/y to $306.2M, (essentially in line with consensus), while segment comparable sales were up 4.0% in 2Q14 excluding e-commerce sales (versus our 4.4% estimate) and 5.1% including internet growth. Comp growth was mostly driven by traffic but also experienced slight inflation for the first time in 4+ quarters.” Vitamin Shoppe closed on Tuesday at $40.14.