NEW YORK (TheStreet) -- Herbalife (HLF) was rising 1.81% to $65.91 at 1:31 p.m. on Monday after the company issued a statement to denounced William Ackman's claims that the company is a pyramid scheme.
The New York Times published an article on Sunday in which it detailed Ackman's meticulous and aggressive campaign to put pressure on lawmakers and other officials to investigate and consequently eliminate Herbalife in order to protect the $1 billion bet he made against the company. The bet came in the form of a short, which only pays off if Herbalife's stock drops.
Herbalife issued the following statement on Monday in response to the article:
"For the past 15 months, Bill Ackman has executed an unfounded, relentless and fraudulent public attack on Herbalife's business model, blasting Herbalife to any media outlet or hedge fund audience willing to listen. As The New York Times reports, Ackman has, out of desperation, shifted his focus from Wall Street to Washington and key states across the country. Ackman's unprecedented campaign to destroy Herbalife has now been exposed for what it is: a cynical, self-serving attempt to manipulate the market by buying his way into an investigation to cover his own reckless $1 billion dollar bet. There has never been merit to his accusations. Now we know how he has been orchestrating the appearance of outrage and concern. There should be no question any longer about Ackman's motives, his techniques and his goals."
TheStreet Ratings team rates HERBALIFE LTD as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate HERBALIFE LTD (HLF) a BUY. This is driven by several positive factors, 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 good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 19.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 60.78% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HLF should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- HERBALIFE LTD has improved earnings per share by 15.0% 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, HERBALIFE LTD increased its bottom line by earning $4.91 versus $3.95 in the prior year. This year, the market expects an improvement in earnings ($6.00 versus $4.91).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Personal Products industry average, but is less than that of the S&P 500. The net income increased by 10.1% when compared to the same quarter one year prior, going from $112.21 million to $123.54 million.
- Net operating cash flow has increased to $195.89 million or 16.67% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.79%.
- You can view the full analysis from the report here: HLF Ratings Report