What happened 

Shares of exercise-equipment company Nautilus (NYSE:NLS) jumped as much as 14.7% in trading Wednesday after getting a positive report from an analyst. Shares ended the day strong as well, closing up 11.9% for the day. 

So what

Analyst Sharon Zackfia at William Blair initiated coverage on Nautilus with an outperform rating on positive profit potential. She thinks the company could increase revenue to $600 million by 2025 and generate earnings before interest, taxes, depreciation, and amortization (EBITDA) of over $90 million. For perspective, the company has generated $374 million in revenue and a negative $1.6 million in EBITDA over the past year. 

Woman working out on a stationary bike in a darkened room.

Image source: Getty Images.

The biggest tailwind is seen as the home-fitness market's growth following the pandemic. Despite the likelihood that gyms will attract guests as the pandemic passes, Zackfia thinks home-fitness equipment sales will continue to increase

Now what

Nautilus's shares have more than quadrupled since March when the pandemic hit on hopes that the company's financial performance will improve as home fitness grows. So, it isn't as if the market hasn't been bullish on the company over the last few months. But even with those gains, there could be value in the stock. Nautilus's market cap is just $464 million right now; if it can generate $90 million in EBITDA in five years, it could be worth much more than that. I am still not buying the move today because I think there are better brands in fitness, but the market sees this analyst note as another reason to buy into fitness stocks as growth stocks 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.