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Mizuho cuts Herbalife share price target, cites CFA John DeSimone return

EditorEmilio Ghigini
Published 03/21/2024, 09:29 AM
© Reuters.

On Thursday, Mizuho Securities adjusted its outlook on Herbalife (NYSE:HLF) Nutrition Ltd. (NYSE:HLF), reducing the price target to $10 from the previous $12, while keeping a Neutral rating on the stock.

This change comes in the wake of the company's announcement on March 20, 2024, which included the return of John DeSimone as Chief Financial Officer, a role he previously held from 2010 to 2018, and the reinstatement of guidance for the first quarter and the full year of 2024.

Herbalife's forecast for its 2024 EBITDA (earnings before interest, taxes, depreciation, and amortization) is now set around the midpoint of market consensus. This projection incorporates approximately $40 million in new savings. Despite these developments, the financial institution anticipates that the company's financial priorities will remain largely unchanged, focusing on debt terms, deleveraging, and profit initiatives.

The firm acknowledged a perceived increase in stability within Herbalife's business operations at the beginning of the fiscal year 2024. While this is viewed as a positive development, Mizuho emphasized the need for stronger signs of revenue recovery before confidence in the company's growth potential can be fully restored.

Consequently, Mizuho has revised its estimated EBITDA for Herbalife in fiscal year 2024 to $566 million, a slight decrease from the previous estimate of $573 million. The new price target reflects approximately five times the firm's projected EBITDA for the calendar year 2024. Despite the lowered price target, Mizuho's stance on Herbalife remains unchanged at Neutral.

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