BTIG Starts Herbalife (HLF) at Buy

BTIG initiated coverage on Herbalife (NYSE: HLF) with a Buy rating and a price target of $55. Analyst April Scee said she is confident Herbalife isn't a pyramid scheme.

"Great industry dynamics & strong business model, but this is not the current focus as stock continues to trade on sentiment, not fundamentals. Importantly, we’re confident Herbalife isn't a pyramid scheme. However, we believe the stock will continue to trade on sentiment, so we’d approach with caution despite significant upside potential," said Scee.

"On a fundamental view, this is an attractive business -- great margins, asset light, continued strong recruitment trends. That is clearly not the investor focus short-term, however, and stock can move 15%+ if an activist shareholder simply indicates he might say something," continued the analyst.

"Civil Investigative Demand (CID) from FTC in March is a request for info, not an inquiry, & we believe a negative ruling is unlikely. Distributors get no fees for recruiting, minimal start-up cost (<$100), most income is sales to consumers, & liberal return policy. Still, nothing requires FTC to decide quickly, in keeping with past precedent, or at all, so overhang remains," she added.

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 $38.32 yesterday.

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