Herbalife to rise on the back of increasing stake of Carl Ichan amidst clearance of FTC probe, leading to increased optimism amongst investors
Herbalife Ltd. (NYSE:HLF) shares surged in the market as Carl Icahn reinforced his confidence in the company. This is why the shares of the nutrition business are rising approximately 13.91% year-to-date through September 9. Even the market indexes such as Dow Jones and S&P 500, are outperforming 3.79% YTD and 4.09% YTD, respectively. The company has 92.91 million shares outstanding, which are trading in the daily range of $61.01-62.41 and 52-week range of $42.26-72.22.
The positive momentum in the stocks of the Los Angeles-based enterprise is due to increasing support from its investors. Only recently, the investors helped it in moving past its challenges Carl Icahn purchased 2.3 million shares of the company to show his confidence in the future of Herbalife. Following this, other investors were also confident about the performance of the dietary supplements provider. The management was thankful for his continued support.
This support came in after it was mocked by activist Bill Ackman who is a short seller for the $5.57 billion business. Earlier, it was rumored that the company had been using misrepresentations to attract investments. However, the company had settled the FTC probe by paying $200 million, stating that it has been involved in no such acts. When Bill Ackman failed to turn investors against the supplier of weight management products, he resorted to spreading rumors about Carl Icahn selling his stake in the company, so that the investors can be further discouraged.
In response to this, Carl Icahn turned down the rumors. He further stated that he had not asked Jefferies to sell its stake, as Bill Ackman had rumored to be accessed by the firm for buying the stake. Following this, Ackman stated that he would only buy a part of the stake in order to save Carl, but turns out Icahn did not need to be saved. Icahn further ensured investors that the company has been undertaking its efforts to restructure its business practices to make them more transparent to investors and analysts. This restored confidence of many in the multinational.
This majorly increased the confidence level of the investors of the company, who have decided to take refuge in the bullish camps. The analysts at FactSet Fundamentals have given the investors with one Buy and two Hold ratings for Herbalife. The median PT has been presented at $78, with potential to increase by 27.7% over the closing price of Friday.