THE SPARK: Ian Corydon of B. Riley Caris lowered Nautilus to "Neutral" from "Buy." He maintained a $7.55 price target.
THE BACKGROUND: Last week Nautilus reported that its fourth-quarter earnings grew more than fourfold to $13.6 million, or 44 cents per share. Adjusted earnings were 24 cents per share. Revenue increased 8 percent to $65 million.
THE ANALYSIS: Corydon said in a client note that brick-and-mortar stores that sell fitness equipment are experiencing soft sales. The analyst said that Dick's Sporting Goods Inc. has experienced weaker sales of treadmills and ellipticals and that there is less demand for Livestrong-branded treadmills following former cyclist Lance Armstrong's doping admission.
Corydon said his optimism that Nautilus could pick up floor space at retailers is tempered by the worsening conditions.
The analyst also said that shares of the Vancouver, Wash., company have nearly doubled since the start of the year. The shares traded at $7.45 on Tuesday, their highest level since October 2007.
SHARE ACTION: Nautilus Inc.'s stock dropped 69 cents to $6.30 in midday trading while the broader markets edged higher.