USANA Health Sciences | Scott Van Winkle, CFA, 1.617.371.3759
\nUSNA : NASDAQ : US$43.16 | US$814.9M | Buy , Target US$55.00<\/p>\n
Negative news continues
\nEvent<\/p>\n
A former distributor in California has filed a lawsuit accusing USANA of fraud and deception. While the plaintiff lost just $500, the suit seeks class action status and an injunction to stop USANA from operating in California.<\/p>\n
Impact
\nNegative. While we are confident in the multilevel business model in general as well as USANA\u2019s specifically, this lawsuit represents yet another negative headline for USANA, which is likely to impact investor and distributor confidence, as well as strain management resources. Although our anecdotal conversations with distributors have found a lack of business impact from the negative press, the duration of these issues for USANA give us caution. The near-term outlook for the shares remains weak, in our view. While the attack on the company has been sustained much longer than we expected when initially recommending the shares following the first report on the company, we continue to believe that the allegations are unfounded and that an appropriate valuation for USNA will ultimately be realized.<\/p>\n
Action
\nMaintain estimates, price target and BUY rating.<\/p>\n
Valuation
\nShares trade at 16.6x this year\u2019s earnings forecast and EV of 10x 2007E EBITDA. With a free cash flow yield of over 6%, we view the valuation as attractive. Our $55 price target reflects an 18 P\/E on our C2008 EPS estimate of $3.05.<\/p>\n
Next Catalyst USANA Health Sciences | Scott Van Winkle, CFA, 1.617.371.3759 USNA : NASDAQ : US$43.16 | US$814.9M | Buy , Target US$55.00 Negative news continues Event A former distributor in California has filed a lawsuit accusing USANA of fraud and deception. […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[184],"tags":[],"class_list":["post-787","post","type-post","status-publish","format-standard","hentry","category-pyramid-schemes-mlm"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p6Z0e-cH","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts\/787","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/comments?post=787"}],"version-history":[{"count":0,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts\/787\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/media?parent=787"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/categories?post=787"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/tags?post=787"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nQ2 earnings are expected to be reported in mid-July. <\/a> <\/a> <\/a><\/a><\/a> <\/a> <\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"