U.S. Markets open in 8 hrs 34 mins

Bear of the Day: Herbalife (HLF)

Kevin Cook
In the latest trading session, Texas Instruments (TXN) closed at $99.54, marking a -1.97% move from the previous day.

Herbalife (HLF) has fallen into the cellar of the Zacks Rank recently as Wall Street investment banks continue to shy away from the network marketer of health and nutrition products.

The Herbalife website now shows just 5 research houses covering the stock, with Citigroup and SunTrust the only two standout names.

After the company reported Q3 results on November 2, and provided guidance for the coming year, SunTrust analysts lowered their 2018 full-year EPS estimate by 8% from $5.65 to $5.20.

HLF delivered a slight EPS miss due to Mexico's earthquakes. But it was the forward outlook which brought the downward estimate revision.

Herbalife provided preliminary 2018 guidance including volume growth of 2% to 6% and revenue growth of 5.5% to 9.5%. The company also projected full-year EPS of $4.60 to $5.00.

But that midpoint of $4.80 does not reflect potential impacts from share buybacks or tax benefits from share-based compensation. These could shift the adjusted EPS guidance higher by as much as $0.50.

Still, that would put the best revised consensus under the prior estimate of $5.40. And we have yet to hear from Citigroup, who raised their price target from $71 to $73 in early October, while maintaining a hold rating.

Ackman Still in the Game

On October 5, HLF shares spiked from $68 to $76 on 7.5 million shares, possibly on word that Bill Ackman's hedge fund Pershing Square might be covering their big short position.

It was confirmed in early November that Ackman had indeed bought back his shares and was reengineering a new short position with put options.

You have to admire his concentration in and dedication to his investment ideas, even if those traits often become his Achilles heel -- think JC Penny (JCP), Valeant Pharma (VRX) and now Chipotle (CMG).

As the continuing saga of Herbalife unfolds, maybe this time, 5 years later, Bill has finally got it right.

Either way, just keep your eye on the Zacks Rank. It will tell you whether it's time to sell, or buy, HLF.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Valeant Pharmaceuticals International, Inc. (VRX) : Free Stock Analysis Report
J.C. Penney Company, Inc. Holding Company (JCP) : Free Stock Analysis Report
Herbalife LTD. (HLF) : Free Stock Analysis Report
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research