****LFVN is about to launch a GLP-1 nutraceutical treatment for weight loss; CEO calls it a “ game changing ” moment; Will this development lead to an expansion in its P/E multiple. ****
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Special Alert on “Buy on Pullback” Model Portfolio Holding Lifevantage Corporation (NASDAQ:LFVN)
LFVN has over $200 million in trailing 12 month revenues, and is profitable. The company engages in the identification, research, development, formulation, and sale of advanced nutrigenomic activators, dietary supplements, nootropics, pre- and probiotics, weight management, skin and hair care, bath and body, and targeted relief products. The company sells its products through a multi-level marketing model.
LFVN shares are up 43.86% since added to the BOP in November, 2023, yet still trades at a P/E of 10x , partly due to lackluster growth.
Now, we are wondering if shares will get a further lift due to a new GLP-1 weight loss product it plans to launch in October . A P/E of just 15x would imply 50% upside .
As discussed later, GLP-1 weight loss benefits have been all the rage, due to Eli Lilly And Company (NYSE:LLY) hugely successful launch of Zepbound® in January.
We are not big fans of multi-level marketing models, which tend to carry low valuations and attract regulatory scrutiny.
However, we are curious if the valuation could temporarily re-rate higher if the product is truly “game changing,” as management commented in a virtual meeting video we tracked down. Furthermore, this quote from the press release announcing the meeting said:
“A pivotal moment of Activate 2024 was the tease of an eagerly anticipated weight loss product set to launch in October in the US market. This innovative addition promises to disrupt the weight management space with two groundbreaking formulas designed to suppress food cravings and balance hunger hormones through cellular activation.”
"This product introduction will be a game-changer for our Consultants and their businesses,” said Fife. “There is no comparable product on the market, and combined with our focus on activating optimal health, it promises unprecedented results. "
But what the press release did not disclose was that the weight loss product is a GLP-1 treatment, a fact ONLY disclosed in the video.. His comment on the product is available here.
The CEO also mentioned that more information will be disclosed as it prepares for the product launch in October.
Listen to what he had to say about the company’s new product.
Surprisingly, the stock has not really moved much since the press release and video.
We presume the stock will trend sharply higher, once investors start catching on. For those new to GeoInvesting, this is what we call information arbitrage:
“…information arbitrage (InfoArb) is a strategy where an arbitrage opportunity arises from a noticeable disconnect between stock prices and the publicly available information on a company that is monetarily worth pursuing. This approach leverages the idea that the market has not yet fully recognized or acted upon certain pieces of public information, leading to potential mispricing of stocks, particularly in the microcap space.”
By the way, recall that Dayton Judd, CEO of multibagger FTLF (also in BOP #11), was recently appointed as a Board Member to watch over LFVN’s attempt to jumpstart growth.
Learn more about GLP-1 below…
GLP-1 is the hottest NEW weight loss treatment and was brought to market by LLY in January of this year, propelling its stock to rise 35% this year.
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LLY’s GLP-1 compound, Zepbound is documented as having little side effects, results in a reduction of body weight by up to 25% and will be the first of many GLP drugs LLY plans to introduce. In a Wall Street Journal podcast, The Journal , LLY CEO said it will take years for it to be able to fulfill the demand for drugs like Zepbound.
LLY’s success is also leading non-pharmaceutical companies to follow suit with their own versions of GLP-1 products, by using natural mechanisms to allow the body to release GLP-1 .
What Is GLP-1?
Glucagon-like peptide-1 (GLP-1) is a hormone that regulates blood sugar, digestion, and appetite. It’s released by cells in the small intestine after eating, and it helps the body in several ways:
Insulin release: GLP-1 prompts the pancreas to release insulin, which lowers blood sugar levels. Insulin is a key hormone that allows the body to use food for energy.
Glucagon secretion: GLP-1 also blocks the release of glucagon, a hormone that raises blood sugar levels.
As far as weight loss goes , here are some traits of the drug that stand out:
Slows digestion: GLP-1 agonists slow down how food moves through the stomach and small intestine, which can help you feel full for longer and eat less. This is known as delayed gastric emptying
Signals the brain: GLP-1 agonists can signal the brain that your stomach has food, which can help reduce your appetite and cravings.
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