Tags: Herbalife | Forecast | Profit | Estimates

Herbalife Lifts Forecast as Profit Tops Estimates

Monday, 29 Apr 2013 06:19 PM


Herbalife Ltd., the nutrition company at the center of a battle between hedge-fund managers Bill Ackman and Carl Icahn, raised its 2013 earnings forecast as first-quarter profit topped analysts’ estimates.

Profit this year will rise to as much as $4.80 a share, up from a previous forecast of $4.65, the Cayman Islands-based company said Monday in a statement. Excluding some items, first- quarter profit was $1.27 a share, topping analysts projections of $1.06 a share, the average of seven estimates compiled by Bloomberg.

Herbalife has fought accusations from Ackman, founder of New York hedge fund Pershing Square Capital Management LP, that it is a pyramid scheme. The company has repeatedly denied the allegations, saying it derives its profits from the sale of unique products. Shareholders have added two directors associated with Icahn, who has come to Herbalife’s defense.

“The company is taking the steps it can to regain investors’ confidence, including increasing the transparency of its business model, providing third-party survey data, changing or eliminating policies that could be perceived negatively, and of course continuing to report strong results,” Brian Wang, an analyst with Barclays Plc in New York, said in an April 25 note. He rates the shares overweight, the equivalent of a buy.

Net income increased 9.9 percent to $118.9 million, or $1.10 a share, from $108.2 million, or 88 cents, a year earlier, the company said.

Net Sales

Fluctuating currencies will hurt per-share earnings in the last three quarters of the year by 7 cents, Chief Financial Officer John Desimone said Monday in an interview.

Worldwide net sales rose 17 percent to $1.12 billion, according to the statement. Analysts estimated $1.09 billion. Sales volume was helped by a 33 percent jump in South and Central America.

Herbalife fell less than 1 percent to $38.58 at 5:29 p.m. in New York. The shares had gained 18 percent this year through the close of regular trading Monday, compared with a 12 percent gain for the Standard & Poor’s 500 Index.

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