Nautilus And The Sports Authority Shutdown: Wunderlich Stays Bullish

Wunderlich’s Rommel Dionisio mentioned that channel checks suggest that Nautilus, Inc. (NYSE: NLS) continues to witness robust sell-through momentum in retail, driven by its recent product launches in the strength and cardio segments.

Dionisio maintains a Buy rating on the company, with a price target of $24.

Channel Checks

“However, given the recent liquidation sales taking place at two major sporting goods retailers, other key retailers appear to be taking a more conservative stance on re-order patterns during this seasonally smaller summer period,” the analyst stated.

Wunderlich’s most recent proprietary channel checks, across more than 40 sporting goods stores, specialty retailers and mass merchandisers in the United States, indicated that Nautilus has continued to gain market share and outperform the overall segment in recent retail sell-through.

Related Link: Sports Authority Strikes Again, Causes Escalade Price Target Cut

This outperformance was mostly driven by the recent successful new product launches in the strength and cardio categories, Dionisio said.

Conservative Stance

On the other hand, several major retailers have also mentioned that they were now taking a more conservative stance, given the ongoing liquidation sales occurring at The Sports Authority and Sports Chalet.

“Sports Authority in particular had been a prominent seller of fitness equipment, one of the largest in the country, and is now offering significant price markdowns,” Dionisio pointed out.

The revenue and EPS estimates for 2016 and 2017 have been reduced following the channel checks.

At time of writing, Nautilus was down 2.24 percent on the day at $18.34.