NutriSystem Inc. NTRI announced below-consensus fourth-quarter earnings per share on Feb. 26 and also issued downbeat earnings and revenue forecasts for 2018.
The Analyst
Argus analyst John Staszak downgraded NutriSystem from Buy to Hold.
The Thesis
This year is likely to be one of transition for NutriSystem as it revamps its sales and marketing strategy, Staszak said in a Tuesday note. The analyst forecast limited upside for the shares.
Argus lowered its 2018 earnings per share estimate from $2.16 to $2.02 and set a 2019 estimate of $2.40.
"Given the company's weaker near-term growth prospects, we believe that NTRI shares are fairly valued at 15.5-times our revised 2018 EPS estimate, toward the low end of the three-year historical range of 13-34," Staszak said.
Argus would consider revisiting the stock if the weight loss company is able to strengthen its marketing efforts and boost growth, the analyst said.
For investors interested in the consumer discretionary space, Argus recommends Marriott International Inc MAR, instead.
The Price Action
NutriSystem shares are down about 44 percent over the past year.
In pre-market trading, the shares were slipping 1.66 percent to $29.90.
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