Morgan Stanley Puts Overweight and PT of $23 on GNC Holdings (GNC)

Morgan Stanley initiated a coverage on GNC Holdings (NYSE: GNC). In a research report published today, Morgan Stanley put an Overweight rating and price target of $23 on GNC, citing strong rise in demand within the health and wellness industry.

In the report, Morgan Stanley states, "We are initiating coverage of GNC with an Overweight rating and a $23 price target (14% upside from current levels; based on 16.5x our 2012 EPS). GNC is riding a health and wellness wave that is fueling 5-7% growth in the vitamins/supplement industry. With 43% of its retail sales in one of the highest growth sub-categories (sports nutrition), and clear industry leadership (domestic store base 12x larger than its nearest competitor), GNC is well positioned to benefit. Factoring in strong operating leverage and debt paydown (5-6% FCF yield), we estimate that GNC can drive 10% EBITDA growth and 16-18% annual EPS growth over the next 3-5 years."

In yesterday's trading, GNC lost 2.05% to close the day at $20.09.