Stonegate Capital Partners has initiated coverage on NU Skin Enterprises Inc. (NYSE: NUS), spotlighting the company's robust financial results and strategic initiatives aimed at fostering growth. NU Skin reported revenue, adjusted net income, and adjusted EPS of $386.1 million, $21.1 million, and $0.43, respectively, with revenue at the high end of the guidance range. The Rhyz Manufacturing segment notably achieved a 17% year-over-year revenue growth, while EPS significantly outpaced expectations.
The company's gross margin stood at 68.8% for the quarter, marking a quarter-over-quarter expansion of 106 basis points. This performance is attributed to NU Skin's focus on revenue growth and operational optimization, leading to a remarkable 103.5% year-over-year growth in adjusted net income. Stonegate Capital Partners expressed encouragement over the continued net income margin expansion, signaling a strong position for the upcoming quarter.
NU Skin is advancing two strategic initiatives expected to drive growth: expansion into India and the launch of the Prysm iO wellness device. The India market entry is on schedule, with pre-opening activities set for the fourth quarter of 2025 and a full launch anticipated by mid-2026. The Prysm iO, an AI-powered wellness assessment device, promises to revolutionize personalized product recommendations through a proprietary subscription service.
Despite a year-over-year decline in sales leaders, paid affiliates, and customers, NU Skin witnessed significant revenue growth in Latin America (107%) and faced challenges in South Korea (22.8%). The company's digital-first model in Latin America is credited for this success, with expectations for continued growth. NU Skin's strong balance sheet, featuring $264.2 million in cash and a positive net cash position, provides flexibility for executing these initiatives.
Following a strong quarter, NU Skin has tightened its FY25 revenue guidance to $1.48 billion to $1.55 billion and raised its adjusted EPS guidance to $1.15 to $1.35. Stonegate Capital Partners values NU Skin at a forward Price to Adjusted EPS of 5.2x, below the average comps of 16.9x, applying a valuation range of $10.95 to $17.21 per share.
For more information on NU Skin Enterprises Inc., visit https://www.nuskin.com.
