Friday, March 28, 2014

Seeking Alpha: Is The Medifast Model Built To Last?

When I last wrote about Medifast (MED) ("Medifast May Be The Best House On A Scary Street"), I thought that the shares certainly looked cheap, but that the risks of the weight loss industry and the company's model made it a less desirable choice. Since then, the shares are up about 13% even with two quarterly misses on revenue and more weakness than expected from weather and a challenging consumer retail environment.

As the shares have risen but the business really has not improved all that much, I find less value in the stock today. I may well be too bearish on the company's plans to franchise its Weight Control Centers, but I don't like the apparent sensitivity of revenue to promotional spending. Medifast does not seem too expensive on standard valuation metrics, but I just don't see enough momentum in the business to be all that excited by the potential.

Follow this link to continue:
Is The Medifast Model Built To Last?

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