Many analysts have downgraded the stock recently. The consensus rating is hold, and the consensus price target is around $63. It has corrected by 5 odd percent from the highs of $76 a few weeks ago. It had gone through another corrective phase recently, but held crucial levels. The last results helped the stock gain some momentum on the upside, and hence it has remained reasonably strong after that. The revenues had grown by nearly 10%, and the net income had grown by around 30% on a yoy basis. On sequential basis, the performance has not been that good as the revenue growth has slowed down, and the net income is also not growing consistently. Over the longer term the stock performance is decent, with the real appreciation in the stock coming over the last 6-7 months. It has appreciated from ~$31 to ~$76 between December 2012 and June 2013. Even after this rise, the valuations remain okay with a trailing P/E of 14.89 and forward P/E of 12.18. A PEG ratio of 0.75 indicates that there are expectations of good growth from the stock in the medium to long term. The price to sales ratio is 1.48, which is also reasonable. The good part is that it does not have any debt on books, and had about $70 million cash on March 30. Considering this, it looks attractive if looked in isolation. But the key to success is faster growth in revenues and improvement in margins. After such a big rise in the stock, it is important that the financial performance catches up fast. For this, new segments / products need to be explored and molecules researched by other companies need to be kept in mind. Chromadex (CDXC) recently launched Nicotinamide Riboside a new vitamin derivative which is thought to have a lot of potential. USNA should attempt to get new products to bolster growth so that the stock remains strong.
