Why This Analyst Is Expecting A More Challenging Q1 For Vitamin Shoppe

Vitamin Shoppe Inc (NYSE: VSI) will have to face a more challenging first quarter than analysts were originally expecting, Macquarie analysts Bob Summers and Max Rakhlenko said in a recent report. The experts cited sizable discounting in some items from a primary competitor, which “may overshadow underlying progress” on the company’s reinvention plan.

For the first quarter, the firm now anticipates EPS of $0.63, down from a previous estimate of $0.68, and about $0.03 below the Street’s consensus. The analysts also moderated both their margin and sales projections (they now envision a 2.4 percent drop in comps) to better reflect the competitive climate. On the other hand, they noted, a reduction in the share count will provide a tailwind for EPS for the first quarter and full year.

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Taking all the aforementioned elements into account, the firm remains bullish on Vitamin Shoppe’s reinvention plan and think “it put the company on the proper strategic path.” Nonetheless, the analysts are still cautious regarding the pace and scale of the improvement.

Consequently, Macquarie reiterated a Neutral rating and $40 price target on the stock.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.