Why Herbalife (HLF) Ended the Week More Than 25% Lower

NEW YORK (TheStreet) -- Herbalife (HLF) took a turn on Thursday that sent shares tumbling and led to a total 26.6% fall over the week as a whole. Shares of the nutritional supplements provider went into a tailspin early Thursday after U.S. Senator Edward J. Markey called for an inquiry into its business practices. Markey has sought comment from the Securities and Exchange Commission, the Federal Trade Commission and Herbalife CEO Michael O. Johnson.

The company was first targeted in 2012 by hedge fund manager William A. Ackman who alleged the company was involved in a pyramid scheme.

On Friday, The New York Post reported Herbalife is also under investigation in China. An investigative report in First Financial Daily, a Chinese newspaper, said "suspicion has been brought up" that the Cayman Islands-based business is involved in a pyramid-style selling scheme.

By market close, shares had unloaded 8.9% to $60.06.

HLF Chart HLF data by YCharts

TheStreet Ratings team rates HERBALIFE LTD as a Buy with a ratings score of B+. The team has this to say about their recommendation:

"We rate HERBALIFE LTD (HLF) a BUY. This is driven by multiple strengths, 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 robust revenue growth, solid stock price performance, impressive record of earnings per share growth, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

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