Pivotal Research Initiates Coverage On Herbalife, Sees $150 To $200 Price Long-Term

Pivotal Research Group initiated coverage of Herbalife Ltd. HLF with a Buy rating and price target of $110.

Analyst Timothy S. Ramey commented that over the long-term he saw potential for the stock to trade at $150 to $200.

Ramey believed "that a combination of the negative spin from Ackman and the tighter controls on the business that the company has initiated in response to his criticism has very likely slowed growth."

Regarding issues with the FTC, the "Herbalife business model today is, in our opinion, above reproach...It may well be in Herbalife’s interest to accept a fine or sanction from the FTC over sins of the past," according to Ramey.

The report concluded that "it looks like [Herbalife] will generate EBITDA of just over $1 billion next year so it is that exceedingly rare combination of low EV/EBITDA (5.2x currently) and growth with a clean balance sheet."

Ramey valued "HLF on a P/E basis with a "tainted" valuation of only 15x EPS – a ridiculously low value for a company that has consistently grown top-line and EPS in double-digit rates."

Herbalife Ltd. recently traded at $46.42, up 2.18 percent.