Bank of America initiated coverage on Herbalife Nutrition Ltd (NYSE:HLF) with an Underperform rating and $14.00 price target.
HLF is a global nutrition company which provides health and wellness products to consumers through direct-sale multi-level marketing (MLM), in which its products are distributed and marketed globally through a network of independent members.
The analyst wrote in a note, “In our view, the largest risk to HLF’s operations is its multi-level marketer (MLM) business model. Visibility into the sales channel of direct sellers is more limited than for their retail-based counterparts. In addition, HLF has significant exposure to emerging markets as North America generated ~25% of sales in 2021. HLF primarily operates in markets in the United States, Mexico, Brazil, Italy, and India. China is an emerging opportunity for HLF, which currently represents ~11% of sales. HLF has relied on the growth of certain markets to bolster sales, particularly in Mexico, Brazil, Spain, and China, to offset slower growth in more mature markets such as the U.S. Meanwhile, the growth of emerging markets is more volatile than mature markets, resulting in lower visibility into sales growth.”
Shares of HLF are down 12.51% in mid-day trading on Friday.