On Thursday, DA Davidson issued a revision on the price target for Nu Skin Enterprises (NYSE:NUS), bringing it down to $7.00 from the previous $11.00, while keeping a Neutral rating on the stock. Currently trading at $6.87, the stock appears undervalued according to InvestingPro analysis, despite falling over 63% in the past year. The adjustment follows Nu Skin's report of a weaker-than-expected performance for the third quarter of 2024 and a reduction in the company's guidance for the full year.
The company's management has acknowledged a slowdown in the second half of 2024 and anticipates this trend to persist into 2025. Despite these challenges, analysts at DA Davidson expect that the decline in revenue might slow down in 2025, with potential sequential improvements throughout the year. This optimism is partly due to anticipated growth in Nu Skin's manufacturing business. The company maintains strong fundamentals with impressive gross profit margins of 74.4% and a healthy current ratio of 1.93.
However, the forecast for when Nu Skin's core business might stabilize is still uncertain. DA Davidson notes that the current cost-saving measures may not be adequate to compensate for the negative effects of an unfavorable geographic sales mix.
As part of their analysis, DA Davidson has also introduced estimates for the year 2026, choosing to project a year ahead. The new price target is based on a multiple of four times the firm's estimated EBITDA for 2026, which is expected to be $151 million.
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