Fitness financials: Two analysts say Nautilus has turned corner, plus Cybex, Crocs, George Foreman Enterprises, Under Armour, Wal-Mart, Foot Locker

Two analysts say Nautilus has turned corner
On the heels of a rather disappointing analyst’s report in mid-May (click here to see the May 22, 2006, SNEWS®, “Analyst tells investors to wait on Nautilus.”), two other analysts have said that Nautilus has turned the corner and that credibility has been restored.

In a bullish report issued May 23 by analyst Mark Rupe, formerly of Adams Harkness and now at Ryan Beck & Co., Rupe initiated coverage at “outperform,” prompting news reports in financial circles and a slight jump in Nautilus stock prices.

Wrote Rupe, “We believe that Nautilus is positioned for continued growth within the U.S. fitness equipment and performance apparel markets and has significant opportunities internationally.” He added that the company considers Nautilus (NYSE: NLS) shares to be a good risk-return tradeoff. He noted innovative new products, expanded distribution and improving operating efficiencies.

Rupe’s price target is $19.

Then, on May 26, Ed Aaron of RBC Capital Markets wrote in a report after attending an analyst day meeting in Tulsa, Okla., that the company had “restored credibility” by being forthright in discussing its path toward operational improvement, including a cost-savings plan for 2006. Aaron added that RBC felt the sentiment on the Street had grown “overly negative” on the heels of the company’s “significant Q4 earnings miss.”

RBC is maintaining its $20 price target, which is based on 16x its unchanged CY-07 EPS estimate of $1.26.

The Portland Business Journal also wrote in a May 26, 2006, article titled, “Nautilus trims offerings, improves distribution,” that the company had changed strategy, headquarters and even names, but that hadn’t helped its struggles and price declines in 2005. Still, with the plans to introduce 15 new products this year, the plight should change. Click here to see that story.

Cybex completes public offering
Cybex International (AMEX: CYB) said it has completed its public offering of 3.5 million shares of its common stock at $5.50 per share. Of the total shares sold, 1.75 million shares were issued by Cybex and 1.75 million shares were sold by the selling stockholders, including UM Holdings Ltd., John Aglialoro and Joan Carter. Cybex said it did not receive any proceeds from the sale of the shares by the selling stockholders.

Crocs raises Q2 guidance, files public secondary offering
Crocs (Nasdaq: CROX) boosted its second-quarter earnings and revenue guidance citing stronger sales demand. It now expects sales for the quarter to be between $62 million and $65 million compared to its previous sales guidance range of $53 million to $55 million.

Distributed in health clubs and bike stores by Lamar Fitness, the company added that it now anticipates net income per diluted common share to range from $0.23 to $0.25, versus its previous expectation of net income per diluted common share of $0.21 to $0.22. The estimates include stock-option expenses.

Crocs shares rose $2.90, or 11.2 percent, to $28.90 in aftermarket trading on the INET electronic exchange, after closing down 41 cents at $26 on the Nasdaq.

Also, the company filed a registration statement with the Securities and Exchange Commission for an underwritten public secondary offering of shares of common stock held by Crocs stockholders. Crocs will not receive any proceeds from the sale of these shares. Piper Jaffray & Co. and Thomas Weisel Partners LLC will be joint book-running managers for the offering.

Dutton Associates weighs in on George Foreman Enterprises
Dutton Associates, an independent investment research firm, updated its coverage of George Foreman Enterprises (GFME.OB) maintaining a “Strong Speculative Buy” rating and a 12-month $5.50 price target, slightly lower than its original $6 target.

Dutton said in a recent report, “There is a potential of appreciation of 60% from the current market price within a 12-month time frame, based on the track record of (George) Foreman and (CEO Seymour) Holtzman.”

In November 2005, the company entered into a preliminary letter of agreement with Circle Group Holdings, which owns the exclusive rights to the product Z-Trim. The final agreement has been extended several times and no resolution has been met. Reportedly, the final agreement document that Circle submitted in late April differed materially from the preliminary agreement. Foreman’s attorney said in a May 3 letter that litigation is inevitable if Circle maintains its position.

Dutton said, “The Z-Trim transaction is now problematic. However, based on our observation of the company’s deal flow, we believe that if the Z-Trim agreement falls by the wayside, as now seems very likely, another candidate should be forthcoming.”

The six-page report by Dutton senior analyst Gerald LaKarnafeaux, CFA, is available at www.jmdutton.com.

Under Armour prices offer of 7.3 million shares
Under Armour (Nasdaq: UARM) said it has priced its public offering of about 7.3 million Class A shares at $34 per share. The stock is being sold by company shareholders, including affiliates of Rosewood Capital and some members of company management, it said. The company will not receive any of the proceeds.

Underwriters have been given an option buy nearly 1.1 million more shares to cover over-allotments. Goldman, Sachs & Co. is the offering’s lead underwriter, while CIBC World Markets and Wachovia Securities are joint lead managers. Banc of America Securities LLC, Piper Jaffray and Thomas Weisel Partners LLC are co-managers. Under Armour has about 47.1 million shares outstanding.

In other news, the company came in at No. 6 in Business Week’s “Hot Growth 100 Companies” list.

Wal-Mart reports May sales
Wal-Mart Stores (NYSE: WMT) reported a 2.3 percent gain for the May reporting period at stores open at least a year. The reporting period was from April 29 to May 26. It plans to release full information about May sales on Thursday.

Foot Locker declares dividend
Foot Locker (NYSE: FL) declared a regular quarterly dividend of $0.09. The company will pay the dividend on July 28 to shareholders of record on July 14.

For more information about these companies or their financial reports, as well as to view stock prices updated every 15 minutes, visit the SNEWS® Stock Market Updates. Click on:www.outsidebusinessjournal.com/cgi-bin/snews/stock_report.html