Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Medifast, Inc. sells a variety of weight loss, weight management and healthy living products all based on its own formulas under the OPTAVIA, Optimal Health by Take Shape for Life, and Flavors of Home brands. The Company’s product line includes approximately 95 consumable options, including, but not limited to, bars, bites, pretzels, puffs, cereal crunch, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes and soups.

         

1.2 The Key Positives, Negatives, and Investment summary

1.3 Key Metrics:

The graphs below demonstrate the consistency in the company’s revenue and upward trend in net income, due to increased demand for the company’s products as well as increased efficiency in lowering the operational costs for the company. MED has experienced an impressive 5-year CAGR growth of 43.05% and 41.06% respectively in revenues and gross profit of the company. Furthermore, MED generated above average ROE in Q2FY22 of 22.6% p.a. as compared to an industry median of 2.6% for the same time. Lastly, MED has a lower balance sheet risk as compared to its peers, which is evident from the lower Debt/Equity ratio of 0.21x in Q2FY22 compared to 0.41x of the industry median.

1.4 Top 10 shareholders:

• The top 10 shareholders together form ~54.50% of the total shareholding, signifying concentrated shareholding. BlackRock Institutional Trust Company N.A. and The Vanguard Group, Inc are the biggest shareholders, holding the maximum stake in the company at ~15.88% and ~14.62%, respectively.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q2FY22:

Section 3: Key Risks

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings per share Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 3: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

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