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Herbalife (HLF) Boosts Q4 View, Yet Shares Drop

 January 17, 2013 09:21 AM

(By Mani) Nutrition company Herbalife Ltd. (NYSE: HLF) raised its fourth-quarter earnings estimate, which also came in above the Wall Street analysts' consensus view, citing that six of its regions expect double-digit Volume Point growth during the October to December period.

However, shares were off 2 percent in the pre-market hours as the company's full-year earnings outlook were in line with estimates and hinted it may record higher expenses in the near-term.

The Cayman Islands-based company now sees fourth-quarter 2012 earnings of $1.02 to $1.05 a share, up from prior outlook of 97 cents to $1.01 a share. In the fourth quarter of 2011, it reported earnings of 86 cents a share.

Earnings for the full-year 2012 are expected to be in a range of $4.02 to $4.05 a share, compared to earlier guidance of $3.99 to $4.03 a share. Last year, the company reported EPS of $3.30.

Street expects earnings of $1.01 a share for the fourth quarter and $4.03 a share for the full year, according to analysts polled by Thomson Reuters.

Net sales for full-year and fourth quarter 2012 are expected to rise about 17.9 percent and 19.9 percent, compared to the prior year periods, respectively. Previously, it expected sales to grow 17 to 19 percent for the fourth quarter and 16 to 18 percent for the full year.

Wall Street analysts expect fourth quarter and full year revenue to grow 17.8 percent and 17.4 percent, respectively, from last year.

Volume Points for full-year and fourth quarter 2012 are expected to increase approximately 20.4 percent and 18.4 percent, compared to the prior year periods, respectively.

Herbalife, expects to begin repurchasing shares of its stock, said its 2013 Volume Point guidance remains unchanged, but there is the likelihood of a temporary increase in expenses, associated with recent events.

The company has been in the middle of allegations of Pershing Square's Bill Ackman, who said the network marketing company that sells weight management, nutritional supplement, energy, sports and fitness, and personal care products worldwide are nothing more than a "pyramid scheme."

Shares of the company fell sharply late December after Ackman disclosed he is shorting the stock. The company said it has been informed that Ackman has shorted its stock for the past 7 to 9 months.

This month, Daniel Loeb's Third Point disclosed a 8 percent stake in the nutritional supplements company. Activist investor Loeb acquired 8.9 million HLF shares or 8.24 percent.

For the third quarter ended Sept. 30, the company's earnings increased 9 percent to $118 million on sales growth of 14 percent to $1.0 billion. The company sees earnings per share of $4.40 to $4.55 for 2013.

The company expects to report fourth-quarter and full-year, audited results on Feb. 19, 2013.



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