Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Medifast, Inc. sells a variety of weight loss, weight management, and healthy living products all based on its own formulas under the OPTAVIA, Optimal Health by Taking Shape for Life, and Flavors of Home brands.

 

1.2 The Key Positives, Negatives, and Investment summary

1.3 Key Metrics:

 Because of rising demand for its OPTIVIA coaches, as seen in the graph below, MED has maintained a remarkable 5-year CAGR of 43.04% per annually increase in sales and 41.06 % per annum growth in gross profit.   The translation of this remarkable revenue and gross profit figures into a greater return on equity is seen in the second graph. As can be seen, MED outperformed the industry standard of 3.2% by providing a return of 22.6% for Q2FY22.

1.4 Top 10 shareholders:

• The top 10 shareholders together form ~54.11% of the total shareholding, signifying a large concentration. BlackRock Institutional Trust Company and The Vanguard Group Inc are the biggest shareholders holding the maximum stake in the company at ~16.47% and ~13.81%, respectively.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q2FY22:

Section 3: Key Risks and Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: Price/ Earnings Per Share Multiple Based Relative Valuation

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 10 August 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.