Auriga Reiterates a 'Buy' on Medifast (MED); Still Like Long-Term, But Cutting Estimates on Mixed Results

Auriga reiterates a 'Buy' on Medifast (NYSE: MED) price target of $21.00.

Analyst, Gary Albanese, said, "Medifast reported mixed Q1 results, as higher costs from the expansion of its Weight Control Center business and increased branding efforts were mitigated by gains within the company's Take Shape for Life (TSFL) segment and its direct response marketing segment. For the quarter, EPS of $0.33 (which excludes severance and inventory write-down) compared to $0.44 last year as well as $0.37 consensus expectations. Much of the decline was related to the Weight Control Centers, which incurred a slight loss in the quarter as new stores continued to ramp up and planned sites incurred pre-opening costs. However, the company's TSFL segment experienced a 6% increase in coaches to 10,200 and monthly revenue per coach rose to $1,650 from $1,600 last year. In addition, the direct response marketing operation had a nearly 20% increase in revenue. With the lower Q1 results, we decreased our FY12 EPS estimate to $1.35 from $1.44."

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 $17.87 yesterday.

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