Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Medifast, Inc. (NYSE: MED) 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. The Company’s product line includes approximately 95 consumable options, including, but not limited to, bars, bites, pretzels, puffs, cereal crunch, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups.

Kalkine’s Diversified Opportunities Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

  Stock Performance:

• MED has been corrected by 29.87% in the past six months, and with 34.83% of correction in the past nine months.

• The stock is leaning towards the lower band of its 52-week range of USD 192.44 and 52-week low price of USD 80.52, with the current price near a decent support area of around USD 75 - USD 80.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 34.07.

             

1.2 The Key Positives, Negatives, and Investment summary

 

1.3 Key Metrics:

The graph shows that MED is having impressive ROE of 24.5% as compared to 2.1% of the industry median implying that the company has generated wealth for its shareholders. The other graph below demonstrates that MED's revenues and gross profits have increased over the previous five years with an impressive 5 –year CAGR of 39.59% for revenue and 38.01% for Gross profits depicting increased demand for products and controlled cost of revenue.

1.4 Top 10 shareholders:

• The top 10 shareholders together form ~52.97% of the total shareholding, signifying concentrated shareholding. The Vanguard Group, Inc and BlackRock Institutional Trust Company N.A. are the biggest shareholders, holding the maximum stake in the company at ~15.80% and ~14.79%, 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 Q1FY23:

Section 3: Key Risks

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• MED has been corrected by 29.87% in the past six months, and with 34.83% of correction in the past nine months.

• The stock is leaning towards the lower band of its 52-week range of USD 192.44 and 52-week low price of USD 80.52, with the current price near a decent support area of around USD 75 - USD 80.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 34.07.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings per share Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

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 May 24, 2023. 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: 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 against further losses in case of unfavorable movement in the stock prices.