- Citigroup comments on Nutrisystem (NASDAQ:NTRI) saying they expect decent 4Q results and are modeling about the mid-point of mgmt's recent guidance. 1Q07 and 2007 guidance will be key though.
With another 2 weeks of business to analyze since the Jan. 31 guidance, they expect mgmt to confirm 1Q07 new customer and EPS guidance. Investors likely expect 30%+ CAC, which should be driven by an increased mix of men, investment in its senior's biz, higher ad rates, and difficult compares.
The firm, however, expect mgmt to initiate conservative '07 EPS guidance (mgmt has historically been conservative) around 5-10% below what they're on track to achieving. They therefore expect a conservative guidance range of about $2.60-$2.75 (vs. Citi est of $2.90, which they think they'll ultimately achieve).
While they expect a solid 4Q and 1Q outlook, the firm doesn't expect the negative investor sentiment to subside until it reports 1Q or 2Q results. At 15x $2.90 est w/ 30% LT EPS growth, they find NTRI compelling and is firm's top pick.
Citigroup rates NutriSystem a Buy with a target price of $92. Management appears to be successfully engineering a turnaround of the NutriSystem brand, which we think is still in the early stage of its growth cycle. NTRI's highly recognized, yet under-levered brand, combined with its high-value proposition for dieters, should allow NTRI to benefit from the rapidly growing diet market. In addition, NTRI should drive new customer growth through further penetration of the US market (only needs 1.5% share to become a $1 billion brand in five years), expansion into international markets, price increases and a focus on male dieters. In firm's view, NTRI is a very good way to capitalize on America's growing obesity epidemic.
Notablecalls: I made a bad s-t call on NTRI last week. The stock gapped up $0.50 following positive comments by Kaufman but gave up most of the gain 30 mins into the trading day. While I continue to like NTRI, I suspect that in the s-t it's a broken stock. One for investors.
With another 2 weeks of business to analyze since the Jan. 31 guidance, they expect mgmt to confirm 1Q07 new customer and EPS guidance. Investors likely expect 30%+ CAC, which should be driven by an increased mix of men, investment in its senior's biz, higher ad rates, and difficult compares.
The firm, however, expect mgmt to initiate conservative '07 EPS guidance (mgmt has historically been conservative) around 5-10% below what they're on track to achieving. They therefore expect a conservative guidance range of about $2.60-$2.75 (vs. Citi est of $2.90, which they think they'll ultimately achieve).
While they expect a solid 4Q and 1Q outlook, the firm doesn't expect the negative investor sentiment to subside until it reports 1Q or 2Q results. At 15x $2.90 est w/ 30% LT EPS growth, they find NTRI compelling and is firm's top pick.
Citigroup rates NutriSystem a Buy with a target price of $92. Management appears to be successfully engineering a turnaround of the NutriSystem brand, which we think is still in the early stage of its growth cycle. NTRI's highly recognized, yet under-levered brand, combined with its high-value proposition for dieters, should allow NTRI to benefit from the rapidly growing diet market. In addition, NTRI should drive new customer growth through further penetration of the US market (only needs 1.5% share to become a $1 billion brand in five years), expansion into international markets, price increases and a focus on male dieters. In firm's view, NTRI is a very good way to capitalize on America's growing obesity epidemic.
Notablecalls: I made a bad s-t call on NTRI last week. The stock gapped up $0.50 following positive comments by Kaufman but gave up most of the gain 30 mins into the trading day. While I continue to like NTRI, I suspect that in the s-t it's a broken stock. One for investors.
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