A Bullish Trend Line Cross
Medifast has just completed a bullish upward move across a resistance trend line. I've purchased a July 16 call option and also bought some shares. I'm hoping it will move up as decisively as it recently moved down, hitting $290 by early July.
For confirmation, look for a candle close above the trend line today. If price closes the day below the trend line, this signal is invalidated.
Fundamentals
I estimate Medifast's forward P/E at about 17, forward P/S at about 2, and forward dividend yield at about 2.33%. P/FCF is about 18. These numbers are pretty middle of the road. But where Medifast really shines is its growth rate. Over a five-year period, it has averaged 7-8% sales and earnings growth and 11% free cash flow growth. Arguably the price multiples are low given that growth rate. S&P Global gives Medifast a 74/100 average fundamentals score. I give Medifast a 4/6 for its earnings outlook. It got a minor downward revision to its earnings forecast around June 1, which is why the price took a dive. But this massive downward move was a huge overreaction relative to the size of the forecast revision, and I expect MED to snap back to around the $300 level.
Sentiment
Medifast has a 9.9/10 analyst summary score, up 0.4 points over the last 30 days. The put/call ratio is somewhat bearish, at 1.6, but I expect that to improve after the bullish trend line cross. Technicals are net bullish, and I estimate about 23% risk/reward ratio here as long as it holds support at 261. There's 35% upside to the average analyst price target.
Medifast has just completed a bullish upward move across a resistance trend line. I've purchased a July 16 call option and also bought some shares. I'm hoping it will move up as decisively as it recently moved down, hitting $290 by early July.
For confirmation, look for a candle close above the trend line today. If price closes the day below the trend line, this signal is invalidated.
Fundamentals
I estimate Medifast's forward P/E at about 17, forward P/S at about 2, and forward dividend yield at about 2.33%. P/FCF is about 18. These numbers are pretty middle of the road. But where Medifast really shines is its growth rate. Over a five-year period, it has averaged 7-8% sales and earnings growth and 11% free cash flow growth. Arguably the price multiples are low given that growth rate. S&P Global gives Medifast a 74/100 average fundamentals score. I give Medifast a 4/6 for its earnings outlook. It got a minor downward revision to its earnings forecast around June 1, which is why the price took a dive. But this massive downward move was a huge overreaction relative to the size of the forecast revision, and I expect MED to snap back to around the $300 level.
Sentiment
Medifast has a 9.9/10 analyst summary score, up 0.4 points over the last 30 days. The put/call ratio is somewhat bearish, at 1.6, but I expect that to improve after the bullish trend line cross. Technicals are net bullish, and I estimate about 23% risk/reward ratio here as long as it holds support at 261. There's 35% upside to the average analyst price target.
Comment:
So far, so good. My call position is up almost 50% today.
Comment:
We're very close to the 290 price target on this.