Markets & Finance

Piper Jaffray Downgrades Overstock.com


Piper Jaffray downgraded Overstock.com (OSTK) to market perform from outperform.

Analyst Aaron Kessler says growth appears to be slowing due to more pronounced seasonality. He cut his $150 million second-quarter revenue estimate to $140 million, vs. the consensus estimate of $148 million; he now sees 24 cents second-quarter loss per share, vs. previous estimate of a 21-cents loss.

Kessler believes second half estimates may be too high as well; he notes Overstock.com recently reinitiated its $1 shipping promotion, which he thinks could indicate third-quarter sales are off to a slow start. He also notes that Overstock.com's continued IT investments could further pressure margins in 2005.

He cut his EPS estimates from 52 cents for 2006 to 42 cents, and $1.45 for 2007 to $1.30. He reduced his $48 target price to $39.


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