GNC Holdings Continues To Gain From New GNC, Global Revenue

On Jun 20 2017, we issued an updated research report on Pittsburgh, PA-based GNC Holdings, Inc. (NYSE:GNC) , a leading global specialty retailer of products for health and wellness, including vitamins, minerals, herbal supplement, sports nutrition and diet. The company currently carries a Zacks Rank #2 (Buy).

Over the last three months, GNC Holdings was trading ahead of the Zacks categorized Retail - Pharmacies and Drug Stores industry. The company has inched up 2.5% compared with the broader industry’s loss of 2.4% over the period. After a solid performance in first-quarter 2017, GNC is expected to maintain the same momentum in second quarter too, banking on its One New GNC plan.

The company has already started incorporating transformational changes in its operations based on the One New GNC Plan. Per management, the new GNC Plan has been getting a favorable response from the customers. Besides, management is currently working on product pricing and innovation.

GNC Holdings is developing new products and formulas to address unmet customer needs and is also expanding customer brands like Beyond Raw, Mega Men, Women’s Ultra Mega and GNC Probiotics.

Also, the company’s growth prospects in international business and strong cash position are encouraging. Management expects to continue capitalizing on international revenue growth opportunities through addition of franchise stores in the existing markets, expansion into new high-growth markets and the growth of product distribution in both existing and new markets.

During the first quarter of 2017, the company’s international business drove a 7% increase in revenue and 10.9% growth in operating income. The company also witnessed improvement in trends in Mexico, South Korea and Hong Kong.

On the flip side, the nutritional supplements industry is characterized by rapid and frequent changes in demand for products and new product introductions. This apart, GNC Holdings’ international competitors include large international pharmacy chains, major international supermarket chains and other large U.S.-based companies with global operations.

Management fears that in the face of stiff competition, the company may fail to function effectively and its attempts to do so may require price reduction, which in turn may hurt margins. Further, currency devaluation in Mexico has adversely affected consumer demand within GNC Holdings’ international business.

Stocks to Consider

A few top-ranked medical stocks are Align Technology, Inc. (NASDAQ:ALGN) , Inogen, Inc. (NASDAQ:INGN) and Accelerate Diagnostics, Inc. (NASDAQ:AXDX) . While Align Technology and Inogen sport a Zacks Rank #1(Strong Buy), Accelerate Diagnostics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology has an expected long-term adjusted earnings growth of almost 24.1%. The stock has roughly added 34.7% over the last three months.

Inogen has a long-term expected earnings growth rate of 17.5%. The stock has roughly added 25.3% over the last three months.

Accelerate Diagnostics has an expected long-term adjusted earnings growth of 30%. The stock has roughly gained 24.5% over the last three months.

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