Liquidity Services shares fall on sales worries
NEW YORK (AP) — Shares of Liquidity Services Inc. tumbled Wednesday on worries that the online auction operator's growth may be slowing.
THE SPARK: Stifel Nicolaus analyst Jordan Rohan backed his "Buy" rating for the company, but cut his price target for it by $6 to $66, saying that its sales are lagging his expectations.
THE BIG PICTURE: The company, based in Washington, auctions surplus and salvage goods from government and business clients through a number of websites.
Rohan said Liquidity Services posted gross sales of $78.9 million in August, which marked a 54 percent increase from the same month last year, but a drop from July 2012.
As a result, he cut his profit prediction for the quarter ending in September by 4 cents to 37 cents per share, roughly in line with Liquidity Services' profit guidance of 35 cents to 38 cents per share.
He also reduced his prediction for gross merchandise volume, the total sales volume of all merchandise sold through the company's marketplaces, to $237.4 million from $249.3 million. The company has said it expects gross merchandise volume of between $230 million and $240 million.
THE ANALYSIS: "We believe that the secular story remains intact, but acknowledge that the current lack of upside to guidance might result in some pullback in shares," Rohan wrote in his note to investors.
THE SHARES: Down $5.31, or 9.6 percent, to $49.77 in heavy afternoon trading, after dropping as low as $48.81 earlier in the day. Over the past 52 weeks, the company's shares have traded between $26.39 and $66.57.