Your Portfolio's Diet Should Include A Serving Of NutriSystem After Strong Results In Q4

NutriSystem Inc. NTRI report strong fourth-quarter 2016 results, beating the estimates on each metric, while issuing its 2017 guidance ahead of expectations, primarily due to mid-teens growth in the core NutriSystem brand.

Wunderlich’s Mitchell B. Pinheiro maintains a Buy rating on the company, while raising the price target from $37 to $52.

Strong Quarter

“With a strong 1Q17 expected, the remainder of the year benefits from the new customer momentum and increases our confidence in our forecast. NTRI continues to be a bright spot in the consumer sector and we expect strong stock performance throughout the year,” the analyst mentioned.

NutriSystem reported its Q4 2016 EPS at $0.29, with revenue of $109 million, representing 21 percent growth.

New customer revenue grew about 28 percent, driven by robust new customer growth and improvements in average customer revenue.

Reactivation revenue also increased 28 percent year-on-year, driven by the “growing pool of recent new customers.”

The company reported EBIT margin of 12.2 percent for Q4, driven by higher gross margin, along with lower SG&A and marketing, with higher depreciation.

Related Link: NutriSystem Reports Q4 EPS $0.29 vs. $0.22 Est., Sales $108.9M vs. $100M Est.

Product Offering

“NTRI said it has seen a strong consumer interest in the South Beach Diet and expects it to contribute $20 million–25 million in 2017 compared to our initial $31 million estimate,” Pinheiro stated.

NutriSystem has also added more grab-and-go items to increase its shelf-stable product offerings. The company expects to see re-orders normalizing.

The EPS estimate for 2017 has been raised from $1.32 to $1.57, to reflect higher new customer revenue growth expectations, driven by continued robust new customer acquisition growth and higher revenue per new customer.

At last check in Tuesday's pre-market session, shares were up 20.41 percent at $47.20.