The results were better than expectations and that led to a good move from $7.8 to $9. The last few days of the up move have not been supported by volumes. There appears to be a little fatigue and a strong push will be required to take it over the $9 level. It is much stable now than it was before the earnings so it is likely that the supports will hold in case of a correction. So a trading range may be established between $7.5 and $9.5, give or take a few cents. Either one can trade the range at extremes with a stop loss or wait for a decisive move before taking a position. The fundamentals need to improve further, to establish a long term positive trend. The management is expecting a good recovery in 2013 and hopes to turn net positive on a full year basis. The focus is on cost control / rationalization and the management is concentrating on the more profitable segments. This has led to a reduction in revenues but the gross margins have improved. To improve the top line the company has to look for new products which may add volumes. Many smaller companies like ChromaDex (CDXC) have built a healthy product portfolio with innovative products. Investors Barry Honig and Dr Frost, Michael Brauser have increased stake in the company based on the confidence in their products. NutriSystems has to be open to new segments and consider inorganic growth opportunities also. NutriSystems has $35 million cash and is debt free. New products will help it get access to successful and profitable products. Next few quarters will indicate the company's strategy and also how the fundamentals will pan out. What is required is a decent growth in revenues accompanied by improvement in margins. In absence of this, the stock will remain subdued.
Agree but if mgmt. excels next qtr. on performance versus market view, like they did last time around, it will be too late to buy cheap. IMO, the fairly significant short position in this stock will serve longs' favor in the not so distant future.