Herbalife stock price target raised to $10 from $9 at Mizuho

Mizuho raised its price target on Herbalife (HLF) to $10.00 from $9.00, maintaining a Neutral rating, citing the company's strategic evolution under new CEO Stephan Gratziani. The firm highlighted HLF's increased focus on innovation, data capabilities, and entry into personalized nutrition via the Pro2col acquisition, which is expected to moderate volume declines and potentially restore growth by fiscal year 2026. Mizuho also increased its FY25 and FY26 EBITDA estimates, noting Herbalife's solid financial health and recent product expansion with MultiBurn, suggesting the stock appears undervalued given its current P/E and strong YTD returns.

Analysis

Mizuho has raised its price target on Herbalife (HLF) to $10.00 from $9.00 while maintaining a Neutral rating, signaling cautious optimism based on strategic shifts under new CEO Stephan Gratziani. The company is actively focusing on innovation and data capabilities to modernize its platform, highlighted by the April acquisition of Pro2col, which facilitates its entry into personalized nutrition. This move is viewed as a new catalyst for volume growth, with beta testing scheduled for Q3. While total volume declines persist, the rate is decelerating from mid-single to low-single digits, with a potential return to growth projected for fiscal year 2026. Supporting this outlook, Mizuho has increased its EBITDA estimates for FY25 to $645 million and FY26 to $668 million. The stock currently trades at a low P/E ratio of 2.85 despite a 37% year-to-date return, and its financial health is rated as "GOOD" with a current ratio of 1.01 and substantial free cash flow generation. The recent launch of the MultiBurn dietary supplement further underscores the company's strategy to expand its product offerings in the health and wellness sector.

Key Decisions for Investors

• Given the low P/E ratio of 2.85 and raised FY25-FY26 EBITDA estimates, value-oriented investors may find the current valuation attractive, but should weigh this against the persistent, albeit moderating, volume declines.
• Investors should monitor upcoming quarterly reports for confirmation that volume declines are stabilizing and for specific updates on the Q3 beta testing of personalized nutrition, as these are the key catalysts for the projected return to growth in FY26.
• Despite the positive developments and undervalued appearance, Mizuho's Neutral rating suggests a balanced risk-reward profile, making it prudent for investors to consider the position as a turnaround play that is heavily dependent on management's successful execution of its new strategy.