Why Vitamin Shoppe Inc Looks Healthy
While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Vitamin Shoppe Inc climbed 2% this morning after Goldman Sachs upgraded the health and wellness products retailer from "buy" to "conviction buy."
So what: Along with the upgrade, analyst Stephen Tanal raised his price target to $65 (from $59), representing about 24% worth of upside to Friday's close. While contrarians might be turned off by Vitamin Shoppe's share-price surge in recent months, Tanal believes that there's plenty of room to run given his forecast of strong comparable sales, margin, and EPS growth going forward.
Now what: Goldman expects Vitamin Shoppe's same-store sales growth to accelerate in the fourth quarter and likely top the Wall Street consensus. "2013 EBIT margins are artificially depressed -- owing to heavy investments undertaken to support long-term growth," noted Goldman. "With incremental margin set to inflect, we expect strong margin expansion in the coming quarters, driving acceleration in EPS growth." With Vitamin Shoppe still off about 20% from its 52-week highs and sporting a forward P/E of 18, I'd agree with Goldman that those prospects aren't being baked fully into the valuation.
Some healthier growth picks
Tired of watching your stocks creep up year after year at a glacial pace? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.
The article Why Vitamin Shoppe Inc Looks Healthy originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.