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Gold/Mining/Energy : Direct Focus Inc. (DFXI) -- Ignore unavailable to you. Want to Upgrade?

To: trilobyte who wrote (731)	1/23/2002 7:25:58 PM
From: trilobyte	Read Replies (1) \| Respond to of 768

Piper's point of view Direct Focus, Inc. (DFXI- $33.99 - #) Rating: Strong Buy; Volatility: High Q4 Ahead Of Expectations; Raising Estimates-FY02 EPS From $2.20 To $2.34; Reiterate Strong Buy Key Points: * Direct Focus significantly beat our expectations for the fourth quarter, reporting EPS of $0.57, which was $0.09 better than our estimate and compares to $0.37 in the year-earlier period. The outperformance resulted from a combination of higher sales and favorable margin rates versus our model. * Across the board, sales were strong in all product areas and extended weakness in the advertising market continued to benefit the direct business, which accounted for 65% of total revenue. Approximately 54,000 Bowflex units were sold during the fourth quarter, an increase of 25% over last year. Importantly, the average selling price (ASP) on Bowflex units increased by $20 to $1,380, aided by the recent introduction of the new Ultimate line. * Nautilus Sleep System sales also exceeded our projection, with fourth quarter revenue around $4.7 million, we estimate, putting the full-year sales contribution slightly above the high-end of our $16-$20 million forecast. Ancillary product sales were another encouraging area as the initial line of Champion nutritional supplements being marketed to Bowflex customers is off to a strong start. * Commercial and retail sales totaled $43.3 million, which is up substantially from last year's $9.2 million, largely due to the inclusion of the Schwinn Fitness business acquired during the third quarter. * We are revising our sales and earnings estimates upward to reflect the recent outperformance as well as a very favorable outlook. Our 2002 EPSestimate is being increased from $2.20 to $2.34 and we continue to expect annualized earnings growth of 25-30% for the next several years. Top-line growth should approach 40% in 2002, to nearly $510 million, we estimate. Note that these revised figures exclude the impact of the pending acquisition of StairMaster, which we anticipate will close in the first quarter-this business has annualized revenue of approximately $40 million and we expect the deal to be accretive. New price target is $42, up from $40 previously, and this is still based on a multiple of 18 times 2002 EPS.