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Nautilus Pops 7.8% After Hours as Board Launches Strategic Review Including Potential Sale of Compan
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Shares of fitness equipment brand owner Nautilus (US:NLS) moved +7.8% higher after hours trading after being down -3.5% over Monday’s trading day. The rally followed an announcement by Nautilus’s Board after market which stated that they had launched a comprehensive strategic review of the company. The move was supported by NLS’s management team.
The Board noted that the review may include the following items:
- A potential sale of the company
- Identifying opportunities to accelerate digital transformation under the previous North Star plan
- Other options to enhance shareholder value
The strategic review comes after Nautilus’s stock price like that of its peers has lost more than 90% of its market value from the company’s peak in 2021 during the pandemic workout from home boom.
The firm has hired investment bank Evercore ISI (US:EVR) to assist with the process.
The NLS Chairman Anne Saunders commented on the announcement saying “Given the dynamic market environment and growth of the home fitness sector, as well as the potential we see to accelerate North Star, the Board felt the time was right to review strategic options”
From the management side, CEO Jim Barr noted to shareholders that “Regardless of the outcome of this process, the future is bright for Nautilus”
More importantly, Barr understands the pressures and headwinds NLS is experiencing and is looking to do what’s best by shareholders as he stated:
“Given the state of the at-home fitness ecosystem, we believe the timing is right to comprehensively assess any opportunities that may accelerate our transformation and enhance value for our shareholders, while also benefitting our customers, employees, and vendors”
The Board however noted in the filing that there is no set timetable for the review conclusion and that there is no assurance the review will result in any transaction or other strategic change.
Analyst Sharon Zackfia from William Blair received the news well and noted that the firm was encouraged by NLS’s efforts to enhance shareholder value with the strategic review.
Zackfia pointed out that the company’s liquidity should be enough to fund operations until the end of FY23 in March without additional financing as long as the company meets the lower end of its guidance range.
The firm remains optimistic on NLS’s ability to grow revenue and operating margins post 2022 as high margin subscribers generate a greater portion of revenue.
William Blair held firm on their ‘outperform’ on the stock.
On average, NLS has a consensus ‘overweight’ recommendation and $3.50 average target.
Options sentiment remains bullish for NLS, explained by Fintel’s Put/Call ratio of 0.35. This ratio is determined by the level of open call interest in the stock divided by the put interest for the stock.
The ratio turned negative with a ratio above 1.00 in June while the stock price was falling. Since the share price bottomed and showed a sense of stability, sentiment crept up again for the stock.
Full year 2023 guidance:
For the full year, Nautilus expects to generate group sales in the range between the range of $380 to $460 million with two thirds of the revenue expected to be skewed to the second half.
The company expects full year adjusted EBITDA between negative $25 to $35 million with a positive adjusted EBITDA result expected in the second half.
A chart from the Fintel financial metrics page for NLS and shows revenue and profitability rolling metrics over time against the share price.
This article originally appeared on Fintel
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