THE SPARK: For the current quarter, Medifast said it expects to earn between 32 and 35 cents per share on $93 million to $95 million in revenue. Analysts polled by FactSet expected net income of 43 cents per share and $101.1 million in revenue.
THE BIG PICTURE: The Owings Mills, Md., company makes and distributes weight loss and other health and diet products through the internet, health coaches, direct marketing and weight control centers. Over the past year, the company's shares have risen about 52 percent.
On Thursday, Medifast also issued a full-year profit and sales outlook that bracketed current Wall Street predictions, along with better-than-expected fourth-quarter results.
THE ANALYSIS: Wedbush analyst Kurt Frederick backed his "Outperform" rating and $37 price target for Medifast, saying that the lower-than-expected first-quarter guidance was largely a result of a shift in the Easter holiday, which reduced the number of business days during the period.
Frederick added that Medifast's full-year outlook may prove to be conservative, noting that the company is actively looking to boost its distribution, both in the U.S. and overseas, and could buy back a big chunk of stock this year. Neither of those factors is taken into account in the company's outlook, he said.
But Janney analyst John San Marco was less optimistic and stuck by his "Neutral" rating for Medifast. He said he thinks the company's ambitious growth targets, better capital management and greater sense of urgency are all appropriately reflected in its stock price, but cautioned that any mistakes in the execution of its growth strategies could put its profits at risk.
THE SHARES: Down $2.21, or 9 percent, to $22.19 in heavy morning trading, after falling as low as $21.75 earlier in the day. Over the past 52 weeks, the company's shares have traded between $15.42 and $33.29.