Herbalife Isn't Worth $50 Per Share Anymore, Canaccord Notes

In a report published Monday, Canaccord Genuity analyst Scott Van Winkle wrote that shares of

are starting to feel like a "value trap" but are still undervalued. Van Winkle noted the company's fourth quarter report showed sales and volume growth came in four percent to five percent below forecast. In addition, the earnings per share upside ($1.41 versus a consensus estimate of $1.22) reflected a strong gross margin and several beneficial below-the-line items such as a 200 basis point lower tax rate and one percent lower share count. Van Winkle also commented that the company's 2015 earnings per share revised guidance of $4.10 to $4.50 was cut about $1.30 at the midpoint. The analyst added that $0.60 of which was currency related and $0.10 cents higher than he had modeled. The remaining $0.70 of the revision reflects lower volume expectations from the near term disruption I marketing plan changes which proved to be "more significant" than anticipated. "We continue to believe that the shares are significantly undervalued assuming any reasonable resolution to regulatory scrutiny," Van Winkle wrote. "Our BUY rating is based on the expectation of a resolution removing uncertainty without a debilitating impact on the business model that leads to a meaningful revaluation." Shares were reaffirmed with a Buy rating with a price target lowered to $42 (10x 2015E EPS of $4.20) from a previous $50.