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LoopNet is
scheduled to report third quarter 2008 results after the market
closes on Thursday, October 30. Based on our analysis, we at
eChristianInvesting are expecting LOOP to report better than
expected results that beat Wall Street’s consensus expectations.
Analyst Expectations
We are
forecasting revenues of $21.8 million and EPS of $.14. This
would represent a 17% increase in revenues from last year’s
$18.6 million in the same period. The current analyst consensus
calls for revenues of $21.9 million and $.12 EPS. On July 30,
the company gave 3rd quarter guidance for revenue of
$21.8 – 22.0 million and EPS of $.14 – .15.
Our checks
showed good traffic growth in the third quarter for the
LoopNet.com website. Management has done a superb job of guiding
this company despite the current economic challenges. Since
going public in the summer of 2006, the company has managed to
beat analyst estimates each quarter and we believe that will be
the case yet again this quarter.
Share Performance
To date,
LoopNet’s shares have dropped over 51%. Meanwhile, the NASDAQ
has only fallen 41%. This poor share performance is primarily a
result of the markets disfavor of all real estate related stocks
despite the fact that LOOP focuses on the much more stable
commercial real estate sector.
Valuation
Shares are
now trading at 11x consensus 2009 EPS estimates. This is
essentially inline with their peer group. Despite the potential
for better than expected quarterly results, with the continued
bleak outlook for the real estate sector we would not recommend
holding LOOP shares in the current market. However, once
consumer sentiment starts to improve, we believe that LoopNet
will benefit from their leadership position in the online
commercial real estate space.
Recommendation: Hold with a $7 price target.
At the time this article was published, the author did not have
a financial position in any of the stocks mentioned in this
article.
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