Pivotal Research Starts Herbalife (HLF) at Buy

Pivotal Research initiated coverage on Herbalife (NYSE: HLF) with a Buy rating and a price target of $110.00. Analyst Timothy S. Ramey thinks the stock could rise 50% if the company reaches agreement with the FTC.

"If our job as analysts is to assess risk, quantify upside, and understand the downside, there is perhaps no better example of “alpha” in the stock market today than Herbalife. In our 12-18 month view, we set a target price of $110 or 14.9x our 2015 estimate of $7.40. Longer-term we see potential to trade to the $150-$200 level; yet bear-case risk would likely only test the recent lows in the 40s. As a wise man recently said – “may the best analyst win," said Ramey.

"We’ve done the work, and an impressive array of other long-side investors have as well. The Herbalife business model today is, in our opinion, above reproach. However, we are mindful of the FTC investigation and mindful that regulators like to “win.” It may well be in Herbalife’s interest to accept a fine or sanction from the FTC over sins of the past – aggressive income claims by distributors, lead-generation, etc. We anxiously look forward to the deal with the FTC – it will likely bless the current structure while extracting some pound of flesh for sins of the past. We can envision an “FTC day” being a day when HLF shares rise 50% or more. The company is cooperating fully with the FTC and has often stated that it has nothing to hide," he 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 $45.43 yesterday.

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