With financial services stocks closing lower following some marquee earnings reports, the major equity indexes closed the week mixed as the Dow Jones Industrial Average eked out a small gain to extend its winning streak to six days.
Herbalife Ltd. (HLF)
Shares of nutritional supplements maker Herbalife Ltd. soared nearly 10% on volume that was more than 30 times the daily average after HLF said it will pay $200 million to regulators and alter its business practices to avoid the ominous pyramid scheme designation.
News of the HLF settlement deals a significant blow to Bill Ackman’s Pershing Square Capital hedge fund, which has famously been short shares of HLF. California-based HLF also “said its board had cleared the way for billionaire investor Carl Icahn to boost his stake in the company to as much as 35 percent from his current 18.3 percent,” reports Reuters.
HLF’s settlement is with the Federal Trade Commission, which began investigating the company’s business practices two years ago.
Jabil Circuit, Inc. (JBL)
Electronic components maker Jabil Circuit climbed 5.8% after Raymond James analyst Brian Alexander boosted his rating on JBL to “strong buy” from “outperform.” The analyst has a $26 price target on JBL, implying significant upside from Friday’s close.
Alexander highlighted JBL’s strong cash position and the potential for the company to return portions of that cash to shareholders.
“We believe that Jabil is in the early innings of a transition from heavy organic investment with limited capital return, to a more balanced approach. This reminds us of Flex prior to FY11, and we would point out that Flex’s share price has doubled during the past five years (JBL~flat),” said Alexander in a note posted by Barron’s.
Florida-based JBL holds its analyst day in September.
WestRock Co (WRK)
Packaging company WestRock Co advanced 5.7%, finishing a week that saw WRK surge more than 10%.
Earlier this week, Jefferies added WRK to its franchise picks list. Jefferies highlighted WRK’s ambitious share buyback plan that could swallow as much as 15% of shares outstanding and that WRK trades at a free-cash-flow yield of over 10%.
Jefferies has a $56 price target on WRK, which is nearly 33% above where the stock closed today.
At the time of this writing, Todd Shriber did not own any of the aforementioned securities.