Bombs Away: CROX, NTRI, and SHRP

What a day for these stocks but it's the end for the Sharper Image Corporation (NASDAQ:SHRP). SHRP declared Chapter 11 Bankruptcy and shares now stand at 35 cents.  So forget about SHRP for the next six months, let's talk Crocs and NutriSystem.

Crocs, Inc. (Public, NASDAQ:CROX) is down another 13% today and everyone is betting against them (for now).  CROX has been and is a Momentum stock but even at $27, the stock is looking tasty.  The issues from yesterday's earnings call is the 2008 outlook and inventory concerns.  Their Q4 profit increasing 84% wasn't enough for this market as well as their international sales making up almost 50% of their revenue (great sign by the way going forward). For the full year, revenue was up 138.9%, to $874.4 million, and net income increased 161.2%, to $168.2 million. 

Just today Analysts at Robert W Baird maintained their "outperform" rating on Crocs Inc but reduced their target price from $62 to $50.

In a research note published this morning, the analysts mention that the company has reported its 4Q07 EPS and sales ahead of expectations. Crocs’ inventory at the end of the quarter stood at $248.4 million, representing a sequential rise of 27.2%, ahead of the estimates, the analysts say.

That's all fine and dandy Masters, so lets watch CROX shares tread water for the next few days then watch for the drop.  Yesterday Ted G wrote: Crocs Inc. at $28 a share - Are you serious Wall Street?, and I agree with his conclusion.  For the growth and price, despite the silly product, Crocs is looking like a buy.

Next we move onto NutriSystem (NASDAQ:NTRI) who's conference call was just bad news after bad news which is why the stock is at $16 today. In the last 5 days NTRI shares have tanked 25% and over the last 6 months they've fallen 66%. 

Analysts polled by Thomson Financial expected NutriSystem to reach $825.3 million in revenue for the year. On Tuesday the company forecast $690 million to $710 million in sales, saying customers are cutting back due to economic concerns -- a huge miss. Its first-quarter outlook is also lower than analysts expected.

Shares sank $5.89, or 24.7 percent, to $18 in premarket trading. The stock, which last traded at that price in August 2005, closed at $23.89 on Tuesday.

Citi Investment Research analyst Gregory R. Badishkanian said it was not surprising that NutriSystem would experience weaker sales in a time of economic uncertainty, as a 30-day supply of its meals costs about $300.

NutriSystem didn't lose market share to rivals, he said, and the company should be able to report "decent" growth in the second half of the year. He thinks comparisons to first-half 2007 results will be difficult, however.

Badishkanian cut his price target to $29 per share from $38, and sharply cut his 2008 and 2009 profit estimates. He kept a "Buy" rating on the stock.

So our fellow Stockmasters, I want you to keep NTRI and CROX on your buy lists, I'm thinking about picking up shares but think they can get even cheaper.  With so much negative press on both of these companies, let the system push them down further then make a move.

Article written by Eric Cheshier

Co-Founder of theStockMasters.com

Disclaimer: The Author does not own any positions in SHRP, CROX, or NTRI.

If you liked this article, Eric Cheshier also contributes to the Master Picks Newsletter and the Quant Method , only available at WallstNewsletters.com.