Medifast (MED) Buy Maintained at Imperial Capital Post Q4
Imperial Capital analyst Mitchell Pinheiro reiterated an Outperform rating and $30 price target on Medifast (NYSE: MED) following fourth quarter results.
Pinheiro commented, "Once again, MED had a disappointing revenue performance in 4Q13 due to a weak consumer environment for commercial diet products and a reduction in advertising due to poor response rates. While 1Q14 results will likely be down year-over-year (yoy) and the full year is largely back-end loaded, we believe MED’s array of new product initiatives and smarter spending will allow the company to post yoy revenue and EPS growth. In our view, 2014 looks to be a transition year with multiple moving parts including the conversion of 10-15 company-owned weight loss centers to franchisees, pressuring revenue growth, but with meaningful margin benefits. MED continues to grow geographically, particularly in Mexico and in the newly opened Canadian market. While 2014 should start slowly, we believe MED’s multi-channel distribution model, vertical integration, and improving brand awareness will enable the company to gain share in the commercial diet sector over time. The stock trades at the low end of its historical EV/EBITDA range, providing an attractive entry point for patient long-term investors."
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 $24.96 yesterday, with a 52 week range of $21.75-$29.47.
Pinheiro commented, "Once again, MED had a disappointing revenue performance in 4Q13 due to a weak consumer environment for commercial diet products and a reduction in advertising due to poor response rates. While 1Q14 results will likely be down year-over-year (yoy) and the full year is largely back-end loaded, we believe MED’s array of new product initiatives and smarter spending will allow the company to post yoy revenue and EPS growth. In our view, 2014 looks to be a transition year with multiple moving parts including the conversion of 10-15 company-owned weight loss centers to franchisees, pressuring revenue growth, but with meaningful margin benefits. MED continues to grow geographically, particularly in Mexico and in the newly opened Canadian market. While 2014 should start slowly, we believe MED’s multi-channel distribution model, vertical integration, and improving brand awareness will enable the company to gain share in the commercial diet sector over time. The stock trades at the low end of its historical EV/EBITDA range, providing an attractive entry point for patient long-term investors."
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 $24.96 yesterday, with a 52 week range of $21.75-$29.47.