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Steiner Leisure Ltd. Company News Alert Substantial common stock price decline since our 1Q 08 update report NASDAQ Common Stock
Ticker: Target price: Current price: Price change since last report:

30 June 2008

HOLD
STNR $41.11 €30.09 (20.9%)

The Steiner Leisure Ltd. (STNR) NASDAQ common stock price has witnessed a substantial decline since our 1Q 08 update report dated 03 June 2008, reflecting investor concerns regarding the global economic health and resultant slowdown in the leisure and hospitality industry. Taking into consideration the difficult market environment and cautious fundamental outlook, we hold a conservative growth stance for Steiner over the next couple of years. Subsequently, we maintain our current HOLD rating for the Steiner Leisure common stock.

We will reassess the common stock rating for once the company announces its 2Q 08 results. We are likely to revert back to a 6-24 month investment horizon in our next full update report as we now anticipate a significant currency impact on the European stock in the long term. We upgrade the European stock from a HOLD to a BUY as we expect a positive currency impact on the ADR in the coming 6-24 months.

European Stock1
Ticker: Target price: Current price: Price change since last report:

BUY
STNR.F €23.94 €19.47

(20.5%)

We will reassess the ADR (1 NASDAQ common stock = 1 European stock) rating for Steiner Leisure once the company announces its 2Q 08 results.

Supervisor: Shilpen Shah Analyst: Jatin Pradeep Editor: Heloise Capon Global Research Director: Satish Betadpur, CFA Next news due: 2Q 08 results, late July 2008

Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for readers with a shorter trading horizon. These are available online only at www.researchoracle.com

In our 1Q 08 update report dated 03 June 2008, we reiterated the NASDAQ common stock a HOLD on fundamental grounds with a 6-12 month target price of US$41.11, indicating a potential upside of 8%. However, the common stock has declined 20.9% since then. In line with most stocks around the world, Steiner Leisure has experienced significant erosion in its stock price recently pressured by investor concerns regarding health of the global economy, triggered by rising fuel costs, inflationary pressures and reduced consumer spending. Reflecting these macroeconomic concerns, the NASDAQ Composite Index has declined 7.6% since our previous update report, closing at 2,315.63 on 27 June 2008. Steiner Leisure is highly dependent on consumer spending and disposable income of people which has been lately constrained by the subprime mortgage crisis and the subsequent credit crunch in the US. This has led us to forecast a slower revenue growth over the next two years compared to the pace achieved by the company in the past. We expect margins to decline y-o-y in FY 2008 in view of relatively weak economic conditions. Taking into consideration the difficult market environment and cautious fundamental outlook, we hold a conservative growth stance for Steiner over the next couple of years.

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