Tuesday, April 17, 2007

Calls of Note Part 2

- CIBC notes they remain bullish on NutriSystem's (NASDAQ:NTRI) near-term outlook. Firm believes that 1Q07 results should be reported at least in line with their estimate of $0.90 per share, with new customer adds of about 300K. NTRI will report 1Q07 earnings on Wednesday, April 25th.

Firm's analysis of comScore data indicates that traffic to online diet sites continued to slow yoy in 1Q. But nutrisystem.com's traffic share of top diet sites was stable while yoy growth rates in total traffic, and particularly for male traffic, outperformed other top sites.

NTRI shares are trading at 15x FY08 EPS estimate or 17x next 12-months estimated EPS. The latter compares to historical average of 28.5x and a hi-lo range of 47.6x-13.7x. Given the momentum they see in NTRI's business, they'd be opportunistic buyers at this level.

Firm continues to see strength in NTRI's business. Its product and service offering as well as marketing are favorably positioned to target male dieters. Negatives include tough existing and new competition, slowing online traffic trends in the sector, and volatility in the stock.

Notablecalls: Expect to see some buy interest in NTRI following the call. Look for an opening range breakout before stepping in.

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