NLS - Nautilus stock sinks on earnings miss analyst downgrade

Nautilus ( NYSE: NLS ) attracted negative analyst attention after missing earnings expectations on Thursday evening.

The Washington-based workout equipment manufacturer notched a wider than expected loss for its fiscal third quarter, while a 33.4% decline in revenue from the prior year quarter reflected a performance worse than already downbeat expectations. However, gross margin expanded 330 basis points from the prior year.

“Despite solid demand for our products as demonstrated in our Direct segment, headwinds in Retail re-orders persist as our retail partners continue to act conservatively in light of uncertainty in the economic environment,” CEO Jim Barr said. “We are taking decisive actions to reduce our costs and realign our business with the short-term revenue outlook, positioning us to navigate these near-term challenges, enhance free cash flow, and drive long-term profitable growth.”

These actions included a 15% workforce reduction . The company added that it is working to reduce its contracted labor force.

Moving forward, the company trimmed its sales outlook for the full year to about $270M, down significantly from the prior guide of $315M to $365M and well below the $326.29M consensus. The company now expects full year adjusted EBITDA loss to be approximately $50M as compared to the prior range of $30M to $40M.

The disappointing results prompted William Blair analyst Sharon Zackfia to downgrade the stock to a Hold-equivalent rating.

“Despite an undemanding aftermarket enterprise value of just 0.4 times our 2023 sales estimate, we are downgrading shares of Nautilus to Market Perform, as we view any potential inflection into positive sales trends as likely pushed to late calendar 2023 at earliest,” Zackfia wrote.

Shares of Nautilus ( NLS ) slid 3.28% in premarket trading on Friday.

Read the company’s earnings call transcript .

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