The Herbalife stock price staged a strong bullish breakout this year, moving from a low of $5 in March to the current $14, pushing its market capitalization to over $1.4 billion. So, will the HLF share price continue its strong rebound in the coming year?
Herbalife stock price gains steam amid its resilient growth
Herbalife is a top company in the health and wellness industries, focusing mostly on direct selling in the United States and other countries.
The company’s business, which has always been highly controversial, has done relatively well in the past few months as demand for its products has continued rising.
Its most recent results showed that its North American business returned to growth for the first time since the second quarter of 2021, a sign of resilient demand. It also jumped as the number of distributors in its network jumped in most of its regions.
The crucial Latin American business continued to thrive, with its sales rising by 11% to $229 million. Its EMEA and Asia Pacific businesses grew by 2% and 3%, respectively.
The revenue rose by 2.7% in the quarter to $1.3 billion, while the closely-watched earnings before interest, tax, depreciation, and amortization rose to $163 million.
Meanwhile, the company continued to improve its balance sheet by repaying the $147 million in outstanding notes and then reduced the total leverage ratio to 2.8x.
Analysts are optimistic about the company’s turnaround
Wall Street analysts are optimistic that the company’s revenue growth will continue in the coming weeks. The average estimate among the three analysts tracking the company is that its revenue will be $1.25 billion this quarter, up by 3.38% from what it made last year.
Its annual revenue estimate is a modest 0.20% increase to $5 billion, followed by $5.12 billion in the coming year. They also expect that its earnings-per-share will move to $2.15 this year and $2.75 in the coming year.
There are also signs that the company has become highly undervalued as its forward price-to-earnings ratio has moved to 7.6, much lower than the sector median of 18.8 and its five-year average of 9.
Similarly, the company’s forward EV-to-EBITDA multiple of 5.43 is also much lower than the sector median of 10.3, also much lower than its historical averages.
The Herbalife stock price has also jumped as investors bet on its turnaround strategy, which includes more product launches, digital transformation, including the Pro2col app rollout to nearly 8,000 distributors, margin optimization, and debt reduction.
Herbalife share price technical analysis
The weekly chart shows that the HLF stock price has rebounded in the past few months as the company’s turnaround continued. It has already moved above the 50-week and 100-week Exponential Moving Averages (EMA).
The stock is also nearing the 23.6% Fibonacci Retracement level at $18. It also formed an inverse head-and-shoulders pattern, while the Relative Strength Index (RSI) and the Stochastic Oscillator have all pointed upwards.
Therefore, the most likely scenario is where the HLF stock will continue rising as bulls target the 23.6% retracement level at $18. This price target is about 25% above the current level.
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