funny but get the odd feeling these guys are dumping
on their recommendation... one has had to be contrarian in
the current market... report below...
Thursday January 18, 10:35 am Eastern Time
Press Release
U.S. Bancorp Piper Jaffray Initiates Coverage of DFXI With a Strong Buy Rating and a $32 Price Target
MINNEAPOLIS--(BUSINESS WIRE)--Jan. 18, 2001--U.S. Bancorp Piper Jaffray Senior Hardlines Retail Analyst Brent Rystrom today initiated coverage of Direct Focus, Inc. (Nasdaq:DFXI--$26 3/8, (a)) with a Strong Buy rating and a price target of $32, based on a peer group multiple of 15.7 times his 2001 EPS estimate of $2.04. Direct Focus is a leading direct marketer of fitness and healthy lifestyle products. The Company has achieved substantial growth from the success of its Bowflex Strength Training Systems product line. The Bowflex System is a proprietary product that Direct Focus markets directly to consumers through infomercials, commercials, telemarketing and the Internet.
``Direct Focus has achieved significant sales and profits through the success of its Bowflex Strength Training Systems product line,'' said Rystrom. ``We believe substantial opportunity remains for this product, with sales increases likely for the foreseeable future. Despite the sale of about approximately 300,000 Bowflex Systems to date, we believe substantial opportunity remains for further growth as several other leading direct marketed fitness products have sold 800,000 units or more.''
In his report, Rystrom states that Direct Focus is in the process of leveraging its direct marketing skills by selling other products that can benefit from its expertise. ``The first test of this leverage is presently underway as Direct Focus is now marketing in the sleep market with its Nautilus Sleep Systems product line. We estimate the company reached first-year sales of $8 million to $10 million for the Nautilus product line in 2000, and estimate a further increase to $15 million to $16 million in 2001.''
``We believe the Sleep Systems margins will eventually approach the Bowflex levels as sales leverage drives efficiencies,'' said Rystrom. ``Conversely, we believe sales leverage will be more apparent with selling and marketing and general and administrative expenses, which will more clearly reflect the continuing leverage of the Bowflex product line. We estimate Direct Focus will earn $2.04 per share in 2001, representing an increase of 26 percent from our 2000 EPS estimate of $1.62.'' |
