Bank of America Sees Product Cycle as Key to Growth for GNC Holdings

In a report published Friday, Bank of America analyst Curtis Nagle reiterated a Buy rating and $47.00 price target on

. In the report, Bank of America noted, “The supplement industry has one of the steadiest trajectories in retail, averaging growth of 6% and driven by LT demographics such as an increased focus on health/wellness/fitness and to a lesser degree the aging population. However, we believe that the importance of product cycles in driving growth is a factor that has been overlooked and underappreciated, particularly for GNC. From late 2010-2012, GNC meaningfully outperformed (avg. comps of 11% vs. 7% industry growth),due to a successful string of launches of third party and own brand products. We also believe that the lack of a proper product cycle has been a key culprit in GNC's comp weakness over the past few qtrs. While it is still early, we believe that GNC is on the cusp of a new product cycle and expect a reacceleration in comps and EPS. We reiterate our out of consensus Buy rating and $47 PO based on 14x 2015E EPS.” GNC Holdings closed on Thursday at $38.96.