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On Tuesday, DA Davidson reaffirmed its Buy rating on Herbalife (NYSE:HLF) shares with a consistent price target of $14.00. The firm’s analyst, Linda Bolton Weiser, highlighted Herbalife’s potential for a turnaround, spearheaded by the new CEO’s strategic initiatives. According to InvestingPro data, the stock appears undervalued, trading at just 3.2 times earnings, with additional analysis available in the comprehensive Pro Research Report. The CEO’s efforts to enhance distributor engagement, improve digital capabilities, and integrate new technologies are designed to establish Herbalife’s unique position in the wellness industry.
Herbalife has witnessed a notable increase in new distributors, a key metric for future sales, which have risen by double digits over the past three quarters. Additionally, the company has provided guidance indicating an expected mid-point organic sales growth of 4% by 2025.
Despite these positive developments and a deleveraged balance sheet coupled with favorable free cash flow, Herbalife’s stock is perceived to be undervalued by the market, trading at approximately 4 times DA Davidson’s projected 2026 EBITDA of $658 million. The inclusion of Herbalife in the firm’s STAMPEDE list suggests that it meets the criteria for Management Change, one of the key factors in the list’s selection process.
The STAMPEDE list is a curated selection of stocks that DA Davidson analysts believe are poised for significant performance, often due to specific catalysts such as management changes. Herbalife’s addition to this list reflects the firm’s belief in the company’s strategic direction and the steps being taken by the new leadership to drive growth.
Investors will be watching Herbalife’s progress closely as the company continues to implement its turnaround strategy and aims to capitalize on the growing wellness market. The stock’s strong year-to-date return of 21% and substantial free cash flow yield of 20% support the optimistic outlook from DA Davidson. InvestingPro subscribers can access 7 additional key insights and detailed financial metrics to make more informed investment decisions in this evolving situation.
In other recent news, Herbalife Ltd. has announced plans to acquire Pro2col Health LLC, Pruvit Ventures, Inc., and a majority stake in Link BioSciences Inc. This strategic move is expected to enhance Herbalife’s personalized nutrition offerings, with the transactions anticipated to close in the second quarter of 2025. The company also reported a 3% increase in constant currency sales during the fourth quarter of 2024, marking positive growth in four of the last five quarters. Additionally, Herbalife’s leverage has decreased to 3.2 times, with plans to further reduce it to 3.0 times by 2025, supported by an improved balance sheet and positive free cash flow.
DA Davidson recently upgraded Herbalife’s stock rating from Neutral to Buy, doubling the price target to $14.00, citing confidence in the company’s potential for sustained growth under new leadership. Citi has maintained its Buy rating with a $13.00 price target, despite noting a decline in digital engagement across various markets. Meanwhile, S&P Global Ratings upgraded Herbalife’s credit rating from ’B’ to ’B+’, reflecting the company’s deleveraging efforts and improved distributor trends.
Herbalife’s initiatives to modernize its business model and focus on personalized health solutions are underscored by its deepening relationship with soccer icon Cristiano Ronaldo, who will advise on the development of the Pro2col platform. These developments illustrate the company’s strategic direction and efforts to strengthen its market position.
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