The Fitness Stock No One is Talking About
Photo credit: Nautilus
Peloton is getting all the attention as the superstar of Connected Fitness, but the future of exercise is not a winner takes all business. It's time to start taking notice of Bowflex owner Nautilus, which is participating significantly in the workout-from-home trend and is transitioning to digital fitness.
“The pandemic has created a surge in demand for Nautilus’s brands as consumers sought fitness alternatives amid stay-at-home restrictions and fitness club/studio closures. In the second quarter alone, Nautilus’s website had a 300% increase in visits, including a 700% increase in organic traffic, with disproportionate growth in customers new to its brands and products,” according to William Blair.
Peloton competitor: Nautilus's new VeloCore bike offers consumers a Peloton alternative at a competitive price point, with options at $1,699 and $2,199 (dependent on console size).
Bullish call from Citron Research: The short-seller put out a note on Friday broadcasting the firm's high expectations for the stock. Citron put a price target of $30 for the stock, which at the time was trading around $15 a share. Citron also identified Nautilus as a prime takeout target, suggesting the company could fetch a monster valuation based on Mirror's takeout multiple for its acquisition by Lululemon.
"With a newly revamped connected fitness product line, imminent launch of its improved digital JRNY platform, the availability of NLS product at a broader range of retailers, accelerating subscription revenue, and explosive growth second only to ZM across multiple credit card data panels, we believe it is only a matter of time before NLS re-rates to over $30 if it isn’t acquired before then."
Are gyms dead? Gyms are struggling to keep their heads above water due to the shutdown, and a reopening might not be enough to draw consumers back in because workout-from-home products are proving to be sticky. Peloton's member engagement in the recent quarter was strong with 24.7 Average Monthly Workouts per Connected Fitness Subscription vs. 12.0 last year and 17.7 last quarter. Meanwhile, New York Sports Club owner Town Sports filed for bankruptcy on Monday, 24 Hour Fitness filed for bankruptcy in June, and Gold’s Gym sought court protection from its creditors in May.
