Herbalife (HLF) Shares Up 3% On Favorable Court Ruling

Herbalife Ltd. (HLF) shares are higher by nearly 3% to $35.40 in the pre-market session Wednesday after the company received a favorable court ruling against a lawsuit filed by a shareholder who said he lost money after Pershing Square’s Bill Ackman accused the company of being a pyramid scheme.

“Ackman’s allegations aren’t evidence that Herbalife committed fraud, so the lawsuit can’t show that the losses the shareholder suffered were caused by the company misleading investors,” U.S. District Judge Dale S. Fischer in Los Angeles wrote in a March 16 ruling.

Ackman, who has waged a more than two-year campaign against Herbalife, accusing the nutrition company of running a pyramid scheme business model, publicly stated back in 2012 that he is shorting the name, a bet that could net him over $1 billion. Herbalife has repeatedly rejected the allegations, accusing the hedge fund billionaire of making false accusations to enrich himself. The company says it operates with integrity.

Fundamentally, HLF shows the following financial data:

  • $645.40 million in cash in most recent quarter
  • $2.37 billion t-12 total assets
  • ($334.4) million total equity
  • $4.96 billion t-12 revenue
  • $308.7 million annual net income
  • $337.7 million free cash flow

On valuation measures, Herbalife Ltd. shares have a T-12 and forward P/E ratio 10.13 and 7.40, respectively. EPS is $3.39. The name has a market cap of $3.15 billion and a median Wall Street price target of $55.00 with a high target of $75.00. Currently there are 4 analysts that rate HLF a ‘Buy’, 3 rate it a ‘Hold’. No analyst rates it a ‘Sell’.

In terms of share statistics, Herbalife Ltd. has a total of 92.13 million shares outstanding with 11.05% held by insiders and 114.20% held by institutions. The stock’s short interest currently stands at 39.59%, bringing the total number of shares sold short to 32.53 million.

Offering a dividend yield of 3.49%, shares of the George Town KY-based company are down 35.64% year-over-year and 8.67% year-to-date.

Herbalife Ltd. is a nutrition company that focuses on developing and selling weight management and personal care products. The company was founded in 1980 and is based in George Town, the Cayman Islands.

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