NEW YORK (TheStreet) -- Shares of GNC Holdings (GNC) - Get Report are gaining, up 3.41% to $46.72 in early market trading Thursday, after the wellness retailer was upgraded to "overweight" from "equal weight" by analysts at Morgan Stanley this morning.

The firm raised its price target to $56 from $52, saying the recent 9% drop due to GNC's regulatory concerns created a buying opportunity. 

Morgan Stanley added that although the stock is down on regulatory risks, the firm doesn't expect material fallout.

On Tuesday, GNC shares plunged and closed down 8.53% to $44.83 in regular trading session following New York State Attorney General Eric Schneiderman's announcement of the formation of a coalition to look into labeling practices for its nutritional supplements.

GNC announced late Tuesday that the findings of recent third-party tests showed that certain product lots in its Herbal Plus product line are "safe, pure, properly labeled and in full compliance with all regulatory requirements."

Pittsburgh, PA-based GNC is a global specialty retailer of health and wellness products with three segments including retail, franchise, as well as manufacturing and wholesale.

The company manufactures the majority of its branded products, and sells products through a network of more than 8,100 locations.

Separately, 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, good cash flow from operations, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• GNC HOLDINGS INC has improved earnings per share by 16.0% 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 $2.81 versus $2.72 in the prior year. This year, the market expects an improvement in earnings ($3.15 versus $2.81).
• 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. When compared to other companies in the Specialty Retail industry and the overall market, GNC HOLDINGS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
• Net operating cash flow has significantly increased by 189.48% to $65.77 million when compared to the same quarter last year. In addition, GNC HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of 9.17%.
• 38.72% is the gross profit margin for GNC HOLDINGS INC which we consider to be strong. Regardless of GNC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GNC's net profit margin of 8.52% compares favorably to the industry average.
• GNC, with its decline in revenue, underperformed when compared the industry average of 14.2%. Since the same quarter one year prior, revenues slightly dropped by 0.7%. 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