JP Morgan downgraded Altria (NYSE:MO) from "overweight" to "neutral" according toBriefing.com. The news service also reports that Morgan Stanley downgraded SLM (NYSE:SLM) to "underweight" from "equal weight."
Lehman Bros. started coverage of NutriSystem (NASDAQ:NTRI) with an "underweight" rating, according to the AP.
Douglas A. McIntyre is an editor at 247wallst.com.
NutriSystem (NASDAQ: NTRI) is a leading provider of weight management services. The company offers weight loss programs based on portion-controlled meals, individualized calorie plans, behavior modification and exercise. Customers order monthly food packages and receive free online/telephone counseling. The program has no membership fees. NutriSystem also owns and operates more than 100 Slim and Tone women's fitness centers. Competitors include Weight Watcher's International (NYSE: WTW) and eDiets.com (NASDAQ: DIET).
The firm pleased investors earlier in the week, when it offered better than expected first quarter revenue guidance. Management said it anticipated Q1 sales of $216 million, topping the average analyst view of $203.46 million. The solid performance was attributed to better marketing and customer retention. Separately, Chairman and CEO Michael Hagan said he would relinquish his chief executive title to President and COO Joseph Redling on May 1st. The stock was subsequently upgraded to "market perform" by Boenning & Scattergood, which also declared a $30 price target.
If you wanted to look for the blame-game on why stocks listed lower most of the day, you could blame pending home sales at lows, higher oil prices, and even the FOMC minutes hinting at recession without saying "recession." We also saw the White House say it couldn't endorse the current structure of the proposed housing bill.
The truth is, Wall Street and Main Street are also coming to grips with the fact that we are about to get earnings (and guidance) from companies that we can only hope is mixed. Otherwise we just have to hope for "less-bad" news. Get ready for the legacy airline sector's low P/E and low Price to Book values to disappear completely. Below are the unofficial closing bell index prices:
Advanced Micro Devices (NYSE: AMD) saw shares fall almost 5% to $6.03 after it issued an earnings and revenue warning on Monday after the close. Had it not announced a major layoff plan, this would have been far worse. So much for this "growth story."
With all the eating that took place over the last few weeks, it's time to try and shed those unwanted pounds. For those looking to invest based on this inevitable trend, take a look at NutriSystem (NASDAQ: NTRI). The company offers a weight-loss program based on portion-controlled, lower Glycemic Index prepared meals. The stock has certainly shed some girth over the last year, getting trimmed by over 65%.
While you can let me know if you think their meals are tasty or not, at these levels the stocks looks really attractive, sort of like the piece of hot chocolate cake that is staring me in the eyes as I write this! The stock is trading at a PE of just 8.08 and a PEG of 0.44. Their remains a large short-interest on the stock, which is keeping the pressure on, but if the company has some good news, the shorts will have to cover and this could take off like a rocket. At $25 a share, this looks like their will be plenty of upside to the stock price.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position long or short in any stock mentioned as of 1/3/08.
Baidu(NASDAQ:BIDU) will be added to the NASDAQ-100 this morning. BIDU, a Chinese language internet search provider, is recently up $9.79 to $394.77. BIDU December option implied volatility of 79 is above its 26-week average of 60 according to Track Data, suggesting larger price fluctuations.
NutriSystem(NYSE:NTRI) volatility Elevated as shares near two-year low. NTRI closed at $25.37. NTRI over all option implied volatility of 72 is above its 26-week average of 51 according to Track Data, suggesting larger price risk.
Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
MOST NOTEWORTHY: NutriSystem, Endo Pharmaceuticals, Corporate Express NV, Aventine Renewable Energy Holdings and BioFuel Energy were today's noteworthy downgrades:
NutriSystem (NASDAQ: NTRI) was downgraded to Hold from Buy at Lazard and to Buy from Strong Buy at Broadpoint following its lowered Q3 guidance.
Jefferies downgraded shares of Endo Pharmaceuticals (NASDAQ: ENDP) to Hold from Buy after Impax Laboratories (NASDAQ: IPXL) filed a Paragraph IV challenge against Opana ER yesterday to reflect the potential for a generic version of Opana ER arriving as early as 2010 and the possibility of a similar threat against Lidoderm.
Corporate Express (NYSE: CXP) was downgraded to Hold from Buy at ING, as they believe the new CEO's long-term targets are overly ambitious.
JP Morgan downgraded Aventine Renewable (NYSE: AVR) and BioFuel Energy (NASDAQ: BIOF) to Neutral from Overweight, citing weaker fundamentals in ethanol pricing.
NutriSystem (NASDAQ: NTRI), a weight management and fitness products and services company, is recently down $10.57 to $37 in pre-open trading, some 22%.
NTRI announced disappointing third quarter results.
Thomas Weisel says: "3Q fundamentals crumble; we expect challenges into FY08."
NTRI overall option implied volatility of 59 is above its 26-week average of 47 according to Track Data, suggesting larger price risk.
LDK Solar (NYSE: LDK) is a manufacturer of multicrystalline solar wafers.
LDK shares were weak on 10/3 on allegations of inconsistency in inventory reporting.
LDK says: "LDK's management team and board of directors formed an internal committee to investigate the allegations and conduct an immediate physical inventory of LDK's polysilicon materials. The management team found no material discrepancies."
LDK October option implied volatility of 131 is above its 12-week average of 69 according to Track Data, suggesting larger risk.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
MOST NOTEWORTHY: NutriSystem, Under Armour, CME Group, Air France ADS and Kilroy Realty were today's noteworthy upgrades:
NutriSystem (NASDAQ: NTRI) was upgraded to Strong Buy from Buy at Broadpoint on valuation, as they believe all concerns are overdone.
Think Equities upgraded Under Armour (NYSE: UA) to Buy from Accumulate on valuation.
Wachovia upgraded CME Group (NYSE: CME) to Overweight from Market weight, as they expect fed income volumes to benefit from a more active Federal Reserve.
Goldman added Air France (NYSE: AKH) to its Pan-European Conviction Buy List citing valuation following the recent sell-off.
Citigroup upgraded shares of Kilroy Realty (NYSE: KRC) to Buy from Hold on valuation, as they believe concerns are overblown and the company's underleveraged balance sheet can drive growth.
Three years ago yesterday, Google (NASDAQ: GOOG) became public. Since then, those investors who could get past the seemingly high valuation of $85 per share have been generously rewarded with a hefty return of 478%. Google has been a perfect example of the need to look forward when analyzing growth companies. At the time of its IPO, value investors (rightfully so) appeared on CNBC to tell investors that Google was overvalued. However, because Google was able to grow its earnings per share at such an unbelievable rate, the stock's IPO price represents just 8x last year's earnings and 5.5x this year's. Given the choice to buy Google at $85 per share now I'd bet every value, growth, stupid and smart investor would jump on the opportunity to pick up the stock.
But Google hasn't been the only incredible performer during the last three years. In fact, Business Week has an interesting article listing the companies and stocks that outperformed Google during the last three years. You'll find that many of these stocks rose due to some huge underlying trend that these companies were able to ride out for powerful growth.
For example, high oil prices have been a huge trend for profits. Frontier Oil (NYSE: FTO) was able to return 611% to investors over the last three years as the company rode the increased oil prices to make huge refining profits. Foster Wheeler (NYSE: FWLT), with its focus on energy, pharmaceuticaul and environmental infrastructure products, was able to return 557%.
MOST NOTEWORTHY: Countrywide Financial (CFC), Hoku Scientific (HOKU), Lam Research (LRCX), Weight Watchers (WTW) and NutriSystem (NTRI) were today's more noteworthy downgrades:
Friedman Billings downgraded Countrywide Financial (NYSE: CFC) to Underperform from Market Perform until credit stabilizes.
Piper Jaffray downgraded Hoku Scientific (NASDAQ: HOKU) to Underperform from Outperform and sees several near-term risks, including competitive threats from larger and well-financed polysilicon start ups as well as financing risk.
ThinkEquity downgraded Lam Research (NASDAQ: LRCX) to Source of Funds from Accumulate, expecting a recovery in the foundry segment but at 90nm, the nodes where Lam's market share is not high.
Lehman downgraded Weight Watchers (NYSE: WTW) to Underweight from Equal Weight and NutriSystem (NASDAQ: NTRI) to Equal Weight from Overweight...
OTHER DOWNGRADES:
First Albany downgraded Sketchers USA (NYSE: SKX) to Neutral from Buy.
After the bell Tuesday, popular momentum name NutriSystem (NASDAQ: NTRI) reported earnings. While the earnings report was extraordinary -- 70% year over year growth, handily beating analyst estimates, and so on. The company's third quarter guidance cut was enough to send the shares down about 15% in after-hours trading.
While this sounds crazy, I think the company could very well be lowballing its guidance for a variety of reasons. First and foremost, I don't think NutriSystem executives expected the stock to react so poorly to the guidance cut considering the first quarter figures solidly beat the street. In other words, I think the executives expected the incredible second quarter to easily trump any news of a weaker third quarter.
I'm well-aware of the fact that the new weight-loss drug Alli could stand to hurt the company, but I think the primary reason for this guidance cut was to improve Wall Street's perception of the stock when they report next quarter. Faced with tough year over year comparisons from the Dan Marino campaign in Q3 of last year, the company wanted to have something to boast about -- crushing guidance.
While some will argue that the company is betting on higher TV advertising costs, I don't think the true squeeze from advertising costs will come until early 2008 when election campaign spending heats up dramatically and TV stations can increase rates due to the high demand.
I may very well be crazy, but I think NutriSystem is playing the guidance game. Even though the stock looks cheap here, I'd be careful.
Contradicting those who say there is no fat left in the American market, NutriSystem (NASDAQ: NTRI) has made our waistlines its bottom line, and it too is growing nicely. Having outlasted the Atkins craze, the company yesterday reported a hefty 62% increase in earning for the first quarter of 2007 of $238.6 million. Better yet, net income grew 70%, bringing EPS to $1.04, well above the $.91 expected by analysts polled by First Call/Thompson Financial. This compares to a skinny $.60 in 2006.
Ironically, the company is thriving, according to CEO Michael E. Hagen, in part from its failure to provide a long term solution for its customers. In his words, "an integral part of our first quarter has been the ongoing expansion of our pool of ex-customers and their desire to return to NutriSystem for weight management services. The operating margin expansion we saw in the first quarter was partially due to the growth in revenue from ex-customers." Direct sales were also a hefty contributor, up 52% over 2006 to 358,000. Confident in the American appetite for cheesy fries, the company raised guidance for 2007 to $3.34-$3.46.
The company's emphasis on direct sales, lack of direct competitors and its valuable, ever-growing database of people who share my tendency to expand and contract, cause long-term prospects for NutriSystem to look plump. After all, if you pair a milkshake ad, candy bar ad, or a beer ad with a swimsuit ad, what do you get? A NutriSystem ad.
MOST NOTEWORTHY: Take-Two Interactive Software, Inc (TTWO), Sony Corp (SNE), Sun Microsystems, Inc (SUNW), PetSmart, Inc (PETM) and Constellation Energy Group, Inc (CEG) were today's more notable initiations:
Prudential started Take-Two Interactive Software (NASDAQ: TTWO) with a Neutral rating and $25 target, citing valuation and limited impact from GTA IV for the rating.
Prudential believes Sony Corp (NYSE: SNE) is well-positioned to benefit from digital media revolution in consumer electronics and that operating margins will continue to improve; Sony was initiated with an Overweight rating and $62 target.
Cowen views Sun Microsystems' (NASDAQ: SUNW) valuation full and initiated shares with a Neutral rating.
Pali Capital initiated PetSmart, Inc (NASDAQ: PETM) with a Buy rating and $37 target, room for price optimization as their recent checks suggest that consumers prefer PETM, regardless of price.
Credit Suisse initiated shares of Constellation Energy Group (NYSE: CEG) with an Outperform rating and $94 target.
OTHER INITIATIONS:
Stifel initiated several stocks in the network technology sector: Juniper Networks, Inc (NASDAQ: JNPR) was initiated with a Buy rating and $23 target, while Acme Packet, Inc (NASDAQ: APKT), Cisco Systems (NASDAQ: CSCO) and Polycom, Inc (NASDAQ: PLCM) were initiated with Hold ratings.
First Albany initiated NutriSystem (NASDAQ: NTRI) with a Buy rating and $57 target.
Piper Jaffray started OSI Pharmaceuticals, Inc (NASDAQ: OSIP) with an Outperform rating and $42 target.
Tonight on CNBC's MAD MONEY, Jim Cramer talked about diet-plays for betting-to-win off the obesity of America. On weight loss, Cramer said there are ways to profit off the diet fad after the holidays. He wants to get into the weight-loss game before the companies report Q1 results. You can burn calories or cut down calories. There are some that earn major bucks and some to avoid.
As far as a health-club play, Cramer likes Lifetime Fitness (NYSE:LTM). He disagrees with a Prudential 'Underweight' rating; here's why he liked it and why it popped after he talked about it.
He discussed NutriSystems Inc. (NASDAQ:NTRI) as one that is just as dangerous to own now as it was before it recently got hit. He said they sell direct to the consumer instead of through retail outlets. He likes Weight Watchers International (NYSE:WTW). It has a better business model because it is like a profitable A-A. Here is the full note on that one. After Cramer panned it, NTRI fell 0.7% to $43.75 and that is after it fell 15% today. Its 52-week high is $76.33 and the low is $35.01. WTW popped over 1% to $54.77 in after-hours.
Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.
a leading provider of weight management services. The company offers weight loss programs based on portion-controlled meals, individualized calorie plans, behavior modification and exercise. Customers order monthly food packages and receive free online/telephone counseling. The program has no membership fees. NutriSystem also owns and operates more than 100 Slim and Tone women's fitness centers. Competitors include Weight Watcher's International (NYSE: WTW) and eDiets.com (NASDAQ: DIET).
Baidu(NASDAQ:BIDU) will be added to the NASDAQ-100 this morning. BIDU, a Chinese language internet search provider, is recently up $9.79 to $394.77. BIDU December option implied volatility of 79 is above its 26-week average of 60 according to Track Data, suggesting larger price fluctuations. .gif){kind=logo}
MOST NOTEWORTHY: NutriSystem, Endo Pharmaceuticals, Corporate Express NV, Aventine Renewable Energy Holdings and BioFuel Energy were today's noteworthy downgrades:
NutriSystem (NASDAQ: NTRI), a weight management and fitness products and services company, is recently down $10.57 to $37 in pre-open trading, some 22%. 
MOST NOTEWORTHY: Countrywide Financial (CFC), Hoku Scientific (HOKU), Lam Research (LRCX), Weight Watchers (WTW) and NutriSystem (NTRI) were today's more noteworthy downgrades: 
Contradicting those who say there is no fat left in the American market, NutriSystem (NASDAQ: NTRI) has made our waistlines its bottom line, and it too is growing nicely. Having outlasted the Atkins craze, the company yesterday reported a hefty 62% increase in earning for the first quarter of 2007 of $238.6 million. Better yet, net income grew 70%, bringing EPS to $1.04, well above the $.91 expected by analysts polled by First Call/Thompson Financial. This compares to a skinny $.60 in 2006.
MOST NOTEWORTHY: Take-Two Interactive Software, Inc (TTWO), Sony Corp (SNE), Sun Microsystems, Inc (SUNW), PetSmart, Inc (PETM) and Constellation Energy Group, Inc (CEG) were today's more notable initiations:
The week in preview: New quarter earnings kick-off
Comfort Zone Investing: Keep your recovery expectations real
Will Americans have to slim down to fit into their cars?
