DA Davidson has lowered the rating for the stock recently. There have been reports of insider selling, and that has been the catalyst for the downgrade. Now the rating is Neutral instead of Buy, and the huge uptrend in the stock has made the analysts a bit cautious. They have a price target of $80 on the stock. Since there could be several reasons for insider selling, one cannot jump to any huge conclusion immediately, but the fact that the stock has appreciated so much within one year does provide a reason to be cautious. The strategy of booking some profits or a trailing stop loss may be useful. Despite the correction from $70 to $65, the stock is already up more than 116% from its 52 week low made in December. The correction needs to end soon otherwise it may run a little deeper. If one looks at the fundamental position, the company is still trading at decent valuations of low ttm P/E of less than 14 and forward P/E of around 11. The price to sales and price to book are also relatively low. For growth in sales it is concentrating on the greater China region. Innovative molecules are required to bolster growth. Nicotinamide Riboside (NR), being promoted as a wonder vitamin, has been recently launched by ChromaDex Corporation (CDXC) which is a small company backed by Dr Phillip Frost and Barry Honig. USANA needs some good launches which may help it beat the estimates. The estimate for the full year EPS is $5.25 to $5.40. The company requires around 11% growth to meet the revenue estimates of $720 million. So far, the movement in the stock has been backed by good fundamentals, and the company needs to continuously improve on sales & margins to justify the excellent growth in the stock. Slippages may not be accepted too kindly.
