Fitness financials: Town Sports downgraded, plus Nike

Town Sports stock was downgraded by Stifel Nicolaus, and Nike announced a $5 billion buyback program.
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Town Sports downgraded by Stifel Nicolaus

An analyst downgraded Town Sports International Holdings (Nasdaq: CLUB) to "Hold" from "Buy" based on concerns about job losses on Wall Street.

New York is home to about two-thirds of Town Sports' base, and though the financial sector represents only a fraction of the city's employment, Stifel Nicolaus analyst Thomas Shaw wrote in a client note that he expects membership to decline following the sector's fallout. Because of the contractual nature of club membership, he expects the impact to be felt in future quarters.

But Shaw noted improvements in customer service and energy monitoring, and the addition of in-house laundry should help the company in the long term.

The company's largest shareholder also filed forms to distribute its shares to limited partners. The disposal of those shares could create additional pressure in coming quarters.

Stifel lowered its fiscal 2008 earnings estimate on Town Sports by $0.02 to $0.82 per share. For the 2009 fiscal year, Stifel expects earnings of $0.90 per share, down from its earlier estimate of $0.97 per share.

Nike announces $5 billion buyback program

Nike (NYSE: NKE) said its board approved a four-year, $5 billion buyback program. It said the repurchase of $5 billion in Class B common stock will begin following completion of its current $3 billion buyback program.

Nike had about 492.4 million shares of Class B common stock outstanding as of Aug. 31.

"Over the past 10 years, Nike has returned $5.5 billion to shareholders through the repurchase of more than 157 million shares," CEO Mark Parker said in a statement.

Standard & Poor's Equity Research said the buyback will provide "support to the shares in a volatile market."

Citi analyst Kate McShane said in a research note that the share repurchases "could be a big catalyst for the stock in this environment. It demonstrates the strength of Nike's balance sheet (and) the confidence it has in its business."

McShane reiterated a "Buy" rating on shares of the company, saying Nike is one of the strongest names in the sector based on the strength of its balance sheet and ability to gain market share despite a challenging economic environment.

Nike is slated to report fiscal first-quarter earnings on Sept. 24.

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