Nature's Sunshine To Gain From Margin Expansion - Analyst Projects 15% Adjusted EBITDA Margin By FY28

Canaccord Genuity analyst Susan Anderson initiated coverage on Nature’s Sunshine Products NATR with a Buy rating and a price forecast of $18.

The analyst highlights that the company’s products are distributed in over 40 countries, with Asia leading at 45% of sales, North America at 31%, Europe at 18%, and LATAM and other regions at 8% as of FY23.

According to the analyst, Nature’s Sunshine is poised for margin expansion as it increases sales through three key strategies: investing in the higher-margin, rapidly growing digital sector, expanding its international presence in critical markets, and driving innovation in a sector with rising consumer interest.

Anderson writes these initiatives should allow the company to reach the 15% adjusted EBITDA margin goals by FY28, up from ~9% in FY23.

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The analyst points out that, given the global shift towards greater health awareness post-pandemic, the company is well-positioned to capture a substantial share of the expanding market.

According to the analyst, the company’s gross margins could improve through greater product innovation, a shift towards higher-margin digital products, and relief from cost inflation and currency headwinds.

The analyst forecasts that if sales grow at a low-single-digit CAGR, management could enhance operating expenses by approximately 300 basis points.

Anderson projects FY24 adjusted EPS of $0.54, with net sales of $439.5 million.

Price Action: NATR shares are trading higher by 6.26% to $14.08 at last check Friday.

Photo via Shutterstock

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