DA Davidson has adjusted its outlook on USANA Health (NYSE:USNA) Sciences Inc. (NYSE: USNA), reducing the price target to $35 from the previous $38 while maintaining a Neutral rating on the stock.
The revision follows USANA's third-quarter performance, which included a sales figure that fell short of expectations. However, the company's earnings per share (EPS) of $0.56 exceeded the consensus by $0.07, attributed to lower-than-anticipated selling, general, and administrative (SG&A) costs, along with associate incentive expenses.
The company has revised its full-year 2024 guidance downwards, prompting DA Davidson to likewise reduce its fourth-quarter 2024 earnings estimate to $0.49 from $0.65.
Furthermore, the firm has delayed its projection for a year-over-year stabilization of USANA's sales to the fourth quarter of 2025 from the third quarter of the same year. This adjustment has led to a lowered 2025 earnings estimate and the initiation of a 2026 earnings forecast.
In other recent news, USANA Health Sciences has outlined strategic initiatives during its second quarter earnings call. CEO Jim Brown and CFO Douglas Hekking discussed the company's restructuring plans, product innovation, and potential mergers and acquisitions. USANA is also considering expansion into new markets, including India, and has emphasized the importance of distributor training.
Despite experiencing softer sales results in Mainland China, the company remains optimistic about the performance in the Americas and Europe. The executives also addressed the potential for a lower operating margin in the second half of the year due to sales shortfalls and a higher tax rate influenced by tax book changes and currency adjustments.
USANA has appointed Dr. Catherine Armstrong as EVP of R&D and Peter Wang as Global VP and GM of China. The company is actively seeking M&A opportunities and considering share buybacks. USANA plans to launch new products in 2021 to meet changing market demands.
InvestingPro Insights
USANA Health Sciences Inc .'s recent financial performance aligns with several key insights from InvestingPro. The company's impressive gross profit margins, highlighted as an InvestingPro Tip, are reflected in the latest data showing a gross profit margin of 80.77% for the last twelve months as of Q2 2024. This strong margin may help buffer against the sales shortfall noted in the article.
The downward revision of USANA's full-year guidance and DA Davidson's reduced earnings estimates are consistent with another InvestingPro Tip indicating that net income is expected to drop this year. This is further supported by the revenue growth data, which shows a decline of 7.67% over the last twelve months.
Despite these challenges, USANA's financial position remains solid. The InvestingPro Tip noting that the company holds more cash than debt on its balance sheet aligns with DA Davidson's observation of USANA's strong balance sheet with significant cash per share. This financial stability could provide a cushion as the company navigates through its current headwinds.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for USANA Health Sciences Inc., providing a deeper understanding of the company's financial health and market position.
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