On Wednesday, DA Davidson maintained a bullish stance on Nature's Sunshine Products (NASDAQ: NATR), raising the stock's price target to $24.00 from $21.50 and keeping a Buy rating.
The nutritional and wellness products company reported a stronger-than-expected performance in the fourth quarter of 2023, with EBITDA surpassing estimates. Sales in constant currency terms increased by 6% overall, with three out of four major regions experiencing growth.
The company saw a significant improvement in its North American market, where constant currency sales grew by 13%, up from an 11% increase in the third quarter of 2023. This growth came despite a challenging comparison with the previous year. Digital sales in North America were particularly strong, showing a 97% year-over-year increase and accounting for approximately 25% of the region's total sales.
Looking ahead, Nature's Sunshine Products has provided guidance for 2024, expecting constant currency sales to rise between 3% and 9%. In response to this positive outlook, DA Davidson has adjusted its sales estimate upwards and increased its EBITDA projection by 10% to $45.2 million, which would represent a 12% year-over-year increase.
The long-term financial targets for Nature's Sunshine Products include achieving a mid- to high-double digit EBITDA margin, compared to the 9.1% margin recorded in 2023. The revised price target of $24.00 is based on a 7.5 times multiple of the anticipated 2025 EBITDA, which has been increased from the previous estimate of $44.8 million to $49.7 million.
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