NutriSystem upgraded to 'Buy'
Janney analyst raises rating and estimates on NutriSystem ahead of 3rd quarter report
On 8:03 am EDT, Friday October 16, 2009
NEW YORK (AP) -- NutriSystem Inc.'s third quarter results could point the way to improvement in 2010 for the weight loss company, a Janney analyst said Friday.
Analyst Mitchell Pinheiro said profits for NutriSystem may have reached a low point, but its results for September could be a positive sign that will create optimism about the strength of the upcoming New Years' diet season in early 2010.
NutriSystem is scheduled to make its third quarter report on Oct. 27.
Pinheiro upgraded the shares to "Buy" from "Neutral," and boosted his price target to $24 per share from $16. Shares of the Horsham, Pa., company closed at $17.22 on Thursday, and they have traded between $10.01 and $18.68 in the last 12 months.
Pinheiro raised his profit estimate for NutriSystem and said he expects additional growth from a series of new programs, including the NutriSystem D plan, which is targeted at diabetes patients, tie-ins with Schwan's Home Delivery Service and Costco, and a partnership with Wal-Mart Stores Inc. that was announced earlier this month.
The companies said on Oct. 5 that NutriSystem's 14-Day Starter plan will be available at Walmart stores.
The analyst now expects NutriSystem to earn $1.17 per share in 2010, up from $1.03, because he thinks new customer starts will hold steady instead of declining, as they did in 2009, and new customers appear to be staying on their plans for a few weeks longer: he said new customers are staying for an average of 2.25 months, up from 2 months.
