Initiating Coverage: Believe Recent Return to Growth to be Sustainable
Growth resumed for both sales and EPS in 4QFY23, the first time in 16 quarters that both grew simultaneously. While sales growth flattened out a bit in the 1QFY24 (September), top-line momentum continued in the US, driven by the success of the LV360 initiatives, and company-wide EBITDA grew 41.1%, driven by a 230-basis-point improvement in margins. The resumption of growth could be sustainable, driven by a wide range of company-specific initiatives, most importantly its LV360 initiatives, including a sweeping overhaul of its consultant compensation plan, and robust new product activity. FY24 EPS estimate of $0.55 versus a depressed $0.24 reported in FY23. Recent peak EPS was $1.00 in FY21. Our FY25 EPS estimate is $0.65, up 18.8%. We estimate sales growth of 2.1% in FY24, with 2.8% organic sales growth and a 0.7% currency headwind. We also look for a mid-single-digit sales growth in FY25. We look for operating margins to expand back to the 5% range by FY25 from the depressed 2.4% reported in FY23. Recent peak operating margins were 8.7% in FY21. There has been an important change in the company’s cash deployment strategy, with recent payment of a special dividend in September 2023 following the initiation of a regular dividend in May 2022. Going forward, we expect capital expenditures to remain at about 1.4% of sales, with gradual increases in the regular dividend and share repurchases used largely to offset equity grants. We look for cash balances to build as the company continues to convert more than 100% of its net income into free cash flow. The market may reasonably begin to anticipate the next special dividend as those cash balances build. LFVN remains financially strong with no debt and about $1.40 per share of cash on its balance sheet following the recent payment of its special dividend. Stock valuations for direct selling peers remain at the lower end of historical ranges, which, if they begin to revert to the mean, could provide multiple expansion tailwinds for the whole group.LifeVantage is a company focused on biohacking the aging code through nutrigenomics, the study of how nutrition and naturally occurring compounds affect its genes to support good health. The company is engaged in the identification, research, development and distribution of nutraceutical dietary supplements and personal care products, including its scientifically-validated Protandim? line of dietary supplements, LifeVantage? Omega+ and ProBio dietary supplements, TrueScience?, its line of skin and hair care products, Petandim? for Dogs, its companion pet supplement formulated to combat oxidative stress in dogs, Axio?, its Smart Energy Drink mixes, and PhysIQ?, its Smart Weight Management System.
Water Tower Research is built on the foundation of democratizing information flow. We bridge the growing information gap between companies and investors through our investor engagement strategies and open-access research platform.
Our research analysts are Wall Street veterans with the experience and knowledge to work with companies and investors in tandem. We provide access to the information and content that anchors the due diligence process for both professional money managers and individual investors. We leverage traditional research distribution channels and the best of modern digital strategies and tactics to amplify this information flow globally to engage all categories of investors and stakeholders.
Information flow is the foundation for creating investor awareness, knowledge, and engagement. Our mission is to help companies and investors have the tools they need and achieve their goals.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.