Medifast Stock Jumps Past Buy Point As Growth Accelerates
Medifast
Medifast
MED
$18.88
9.48%108%IBD Stock Analysis
- Clears 208.67 buy point from flat base, part of a base-on-base pattern
- Relative strength line hits new high
- Earnings soar, sales growth accelerates
Industry Group Ranking
Emerging Pattern
Flat Base
* Not real-time data. All data shown was captured at
1:07PM EST on
01/06/2021.
Medifast (MED) is the IBD Stock Of The Day as consumers prioritize nutrition and wellness during the coronavirus pandemic, with growth accelerating. Medifast stock, highlighted by CAN SLIM expert David Ryan on IBD Live, topped a buy point Wednesday.
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Baltimore-based Medifast offers a comprehensive weight-loss program. Its coaches teach clients to develop healthy habits through products and plans.
Medifast Stock Technical Analysis
The weight-loss stock surged 9.5% to 218.13 Wednesday to clear a 208.67 flat-base buy point, according to MarketSmith chart analysis. The flat base is part of a base-on-base formation, following a prior cup-with-handle base.
The buy zone extends to 219.10.
The flat base stretched six weeks and formed above the 50-day line. It found support at the 10-week line, rebounding powerfully this week.
The relative strength line made a new high as Medifast stock broke out, a bullish sign. The RS line, the blue line in the chart provided, tracks a stock’s performance vs. the S&P 500 index.
Medifast holds a Relative Strength Rating of 89 out of a possible 99, according to IBD Stock Checkup. That means it has outperformed 89% of all stocks in the past year. Its IBD Composite Rating, which combines key fundamental and technical metrics in a single easy-to-use score, is a best-possible 99.
In IBD’s cosmetics and personal care industry group, Medifast is the No. 1 stock. The group itself ranks a poor 161 out of 197 industry groups tracked by IBD. WW (WW) (formerly Weight Watchers) ranks No. 23 and Herbalife Nutrition (HLF) is No. 8. WW stock and Herbalife gained 9.8% and 2.6%, respectively, on Wednesday.
Medifast Earnings
On key fundamental metrics, Medifast scores well. It earns a superior EPS Rating of 97 out of 99.
Medifast earnings growth averaged 48% over the past three quarters, below the three-year average of 53%. But EPS growth accelerated sharply in the third quarter, reaching 120% from 12% in the prior quarter. Sales growth has accelerated for the past two quarters, from 8% to 18% to 43%. Both quarterly and annual EPS growth are well above the 25% or higher that a CANSLIM investor would want to see in a top growth stock.
In Q3, the number of active coaches rose 30.7% to 42,100. Average revenue per coach rose 11% to $6,329.
Wall Street expects Medifast earnings per share to jump 54% to $9.16 for all of 2020, with a 14% rise to $10.42 in 2021, per Zacks.
The Accumulation/Distribution rating, on an A+ to E scale, measures institutional buying and selling in a stock. A signifies heavy buying by the big money; E means heavy selling. Think of Medifast’s B grade as moderate buying.
In another bullish sign, Medifast stock shows three quarters of rising fund ownership.
A recent Medifast survey found nearly two thirds (63%) of Americans have adopted positive health habits since the coronavirus outbreak in March 2020. Those routines include exercising for a mental health boost, eating healthier, being more mindful and getting more sleep.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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