Why Citigroup Just Upgraded Nu Skin

Beth Kite of Citigroup recently upgraded shares of Nu Skin Enterprises, Inc. (NYSE: NUS) to Buy from Neutral, with a price target raised to $65 from a previous $49 after the company reported better-than-expected fourth quarter results.

Nu Skin earned $0.77 in the quarter, which was three cents above Kite's expectations.

At the same time, the company reiterated its guidance for a mid-single digit decline in 2015 earnings per share and guided its first quarter earnings per share below consensus -- none of which has deterred the analyst from turning bullish.

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"We felt that the earnings call offered much more visibility with regard to the moving pieces in 2015, such that not only do we feel more confident in the outlook for the underlying fundamentals of the business, but more importantly, we've re-evaluated our valuation for the stock," Kite wrote.

Specifically, the analyst learned that:

1. AgeLOC Me is replacing ageLOC Youth in the second half 2015 in North Asia

2. Essential oils may be more important than initially expected

3. Pipeline of sales leaders is "good" so far in the first quarter

4. Share repurchases are not reflected in the current guidance

Kite viewed these points "favorably," and said they support a 2015 earnings per share estimate of $3.95 and a 2016 earnings per share estimate of $4.32.

These figures may even prove to be conservative, she concluded.