UPDATE: DA Davidson Upgrades Herbalife (HLF) to Buy; Boosts PT Up to $78

April 12, 2013 10:01 AM EDT Send to a Friend
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Price: $45.43 --0%

Rating Summary:
    6 Buy, 3 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 10 | Down: 4 | New: 10
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(Updated - April 12, 2013 10:23 AM EDT)

D.A. Davidson upgraded Herbalife (NYSE: HLF) from Neutral to Buy today, while boosting its price target up by $40 to $78.

Analyst Timothy S. Ramey commented that the firm cut its rating on Herbalife earlier in the week due to risks associated with KPMG resigning as company auditor. He said, "After our action, the company made assurances that they did not see the risk of a delisting notice from the NYSE, nor do they believe they are, or expect they may be, in violation of their loan covenants. We are relieved to have these assurances. It’s unfortunate they could not have provided such assurances to us earlier in the day when we asked these questions. Chalk it up to the heat of battle. These are unique circumstances."

Ramey also affirmed an SEC response which was floating around, which concerned “investment/trading activity regarding Pershing Square Capital Management, L.P, Herbalife, and/or William Ackman, from December 1, 2012 through February 15th, 2013.” Information was gained via the Freedom of Informaition Act (FOIA).

Ramey also doesn't see Herbalife having trouble finding another 'Big Four' accounting firm. He comments, "PricewaterhouseCoopers, LLP handles the audit duties for Nu Skin (NYSE: NUS), USANA Health Sciences (NYSE: USNA), Tupperware (NYSE: TUP), and Avon Products (NYSE: AVP). PwC clearly understands the MLM model. Herbalife may be better served by PwC given their depth of experience. This would be the ultimate and hopefully final vetting; putting nails in the “pyramid scheme” charges."

For an analyst ratings summary and ratings history on Herbalife click here. For more ratings news on Herbalife click here.

Shares of Herbalife closed at $38.28 yesterday.


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Related Categories

Analyst Comments, Analyst PT Change, Hot Downgrades, Litigation, Upgrades

Related Entities

William Ackman, Pershing Square Capital, D.A. Davidson

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