Herbalife's (HLF) 'Buy' Rating Reiterated at Pivotal Research Amid Changes at the FTC

Pivotal Research reiterated a Buy rating on Herbalife (NYSE: HLF) with a price target of $90. Comments follow recent gains in the stock that were tied in part to news FTC Chair and critic Edith Ramirez will step down next month.

Analyst Timothy Ramey commented on the development, stating ,"With the departure of Chair Ramirez, the FTC will have three empty seats which means the Trump administration and its appointees will clearly influence the future course of the FTC for many years.'

The analyst added, "We understand why the shares are up today, but this news is really the least of several events since Trump became President-Elect. We knew the Trump administration generally would be more business-friendly and less activist than the Obama administration. That seems obvious. When Betsy DeVos was named to the Trump Cabinet we took that as a very strong signal that the Trump administration had no real issue with the MLM world since Mrs. DeVos counts as a billionaire because the DeVos family’s ownership of Amway. Carl Icahn is close to Trump and we know he is Herbalife’s largest shareholder. So yes, it is fair to say that Herbalife and all legitimate MLMs operate in a Post-FTC world – and that is a positive. But it is not new news today."

Discussing valuation, the analyst said, "Giving effect for the massive strengthening of the $US since the election (and current guidance) we feel compelled to cut EPS estimates by $0.35 in 2017. Yet Organic growth is above expectations on powerful unit and constant currency growth. The tone of the business is solid. Powerful drivers such as a share buyback lie ahead. Organic growth of 5%-7% over the next three years seems like a safe baseline assumption. The balance sheet remains very strong."

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 $49.94 yesterday.

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