Why Nu Skin (NUS) is Continuing Its Falls

NEW YORK (TheStreet) -- Nu Skin (NUS) is looking to end a dismal week even lower according to early trading activity on Friday.

By early morning, shares had taken off 3.8% to $81.57, adding to an overall 40% drop over the week.

The beauty and cosmetics direct seller has been in free-fall since news broke midweek of an investigation into how the company conducts its business in China. According to a report in People's Daily, the Utah-based business has been accused of operating an illegal pyramid scheme, triggering Chinese regulators to launch an investigation.

"We are aware that Chinese regulators have now initiated investigations to review issues raised by recent news reports. The government regularly monitors all businesses in this rapidly growing marketplace, and as is our practice, we will continue to communicate openly with regulators to address any questions they may have," the company responded in a statement.

On Friday, Bank of America downgraded the stock to "neutral" from "buy" with a $94 price target, noting the China investigation will likely hurt sales.

TheStreet Ratings team rates NU SKIN ENTERPRISES as a Buy with a ratings score of A. The team has this to say about their recommendation:

"We rate NU SKIN ENTERPRISES (NUS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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