Auriga Reiterates a 'Buy' on Medifast (MED), but Cutting Numbers on Growing Pains
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Price: $11.44 -0.35%
Rating Summary:
4 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
4 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Auriga reiterates a 'Buy' on Medifast (NYSE: MED) price target cut from $26 to $21.
Auriga analyst said, "Medifast announced 4Q11 results and 1Q12 guidance that was below our expectations, partially due to margin pressure associated with startup costs in its Weight Control Center expansion. While Medifast faces some headwind in the first half of the year due to these costs, we believe costs should abate as 2012 progresses, its store base matures, and as cost cutting initiatives are implemented. Once these issues are resolved, we believe the company should be on sounder ground in the latter half of the year. In the meantime, we expect the company to continue to generate free cash flow that it could use, along with $33 million of cash, to repurchase shares. Nevertheless, we are reducing our FY12 EPS estimate to $1.45 from $1.81 due to these first half challenges, and are also reducing our price target...but reiterate rating as we continue to believe that Medifast shares remain cheap at 4.5x estimated EV/EBITDA."
For an analyst ratings summary and ratings history on Medifast click here. For more ratings news on Medifast click here.
Shares of Medifast closed at $16.70 yesterday.
Auriga analyst said, "Medifast announced 4Q11 results and 1Q12 guidance that was below our expectations, partially due to margin pressure associated with startup costs in its Weight Control Center expansion. While Medifast faces some headwind in the first half of the year due to these costs, we believe costs should abate as 2012 progresses, its store base matures, and as cost cutting initiatives are implemented. Once these issues are resolved, we believe the company should be on sounder ground in the latter half of the year. In the meantime, we expect the company to continue to generate free cash flow that it could use, along with $33 million of cash, to repurchase shares. Nevertheless, we are reducing our FY12 EPS estimate to $1.45 from $1.81 due to these first half challenges, and are also reducing our price target...but reiterate rating as we continue to believe that Medifast shares remain cheap at 4.5x estimated EV/EBITDA."
For an analyst ratings summary and ratings history on Medifast click here. For more ratings news on Medifast click here.
Shares of Medifast closed at $16.70 yesterday.
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