Herbalife (NYSE:HLF) is a less healthy bet for investors as tailwinds from COVID-19 tail off, per Argus Research.
“Pandemic-related restrictions helped Herbalife distributors to earn additional income last year, boosting the company’s revenue and earnings,” a note from the firm on Tuesday explained. “However, the company is now facing a tough prior-year comparison, with headwinds from rising commodity and freight costs, and management projects declines in both revenue and earnings this year.”
As a result of the moderating sales and increased costs, the firm downgraded Herbalife (HLF) shares to “Hold” from “Buy”. The note adds that any visibility on effective efforts to reduce costs and raise prices could change their view, but evidence of improvement to that end is required at this point.
The downgrade from Argus adds to recent downgrades from a host of analysts that trimmed targets and took down ratings after the company’s earnings earlier this month.
Shares fell about 2% in pre-market hours, adding to a nearly 50% decline since the start of the year for the Los Angeles-based multi-level marketing company.
Dig into SeekingAlpha’s Quant Rating on the stock.