NEW YORK (TheStreet) -- GNC (GNC - Get Report) shares are up 5% to $34.31 on heavy volume on Monday after being upgraded to "outperform" from "neutral" by analysts at Credit Suisse (CS - Get Report), who maintained the company's $43 price target.
The firm cited valuation and its approval of new CEO Michael Archbold, who was formerly CFO of Vitamin Shoppe (VSI - Get Report), as reasons for the upgraded outlook.
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TheStreet Ratings team rates GNC HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GNC HOLDINGS INC (GNC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, notable return on equity, attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GNC HOLDINGS INC has improved earnings per share by 5.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GNC HOLDINGS INC increased its bottom line by earning $2.72 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.72).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, GNC HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 40.37% is the gross profit margin for GNC HOLDINGS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 10.35% is above that of the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 0.3%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: GNC Ratings Report