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Bidz is
scheduled to report third quarter 2008 results after the market
closes on Monday, November 10. Based on our analysis, we at
eChristianInvesting are expecting BIDZ to report better than
expected results that beat Wall Street’s consensus expectations.
Analyst
Expectations
We are
forecasting revenues of $56.4 million and EPS of $.11. This
would represent a 41% increase in revenues from last year’s
$40.1 million in the same period. The current analyst consensus
calls for revenues of $55.9 million and $.11 EPS. On August 5,
the company raised their third quarter guidance to revenues of
$55 – 58 million and $.10 - .11 EPS.
Bidz was
one of the star performers of the last earnings season – posting
40% y/y growth that exceeded analyst expectations and the
company’s own guidance. While the economic conditions have
clearly deteriorated in recent months, we believe that Bidz is
one of the few retailers that could stand to benefit as
consumers become more cost-conscious. As the holiday season
gears up, we expect to see strong traffic and customer growth
for both Bidz.com and Buyz.com.
Share
Performance
To date,
Bidz’s shares have fallen 33%. By comparison, the Dow Jones
industrial average has fallen 31% this year, and the Standard &
Poor's 500-stock index is down 35%.
Valuation
Shares are
now trading at only 9x consensus 2009 EPS estimates. This is
well below the relative valuations of their peer group and
considerably below top competitor Blue Nile’s 23x multiple. The
discrepancy seems even bigger when you consider that in the 2nd
quarter Blue Nile revenues grew only 2% while Bidz posted
top-line growth of over 40%. So, we see large upside potential
for Bidz shares (analyst consensus target price of $16) in the
coming months.
Recommendation:
Buy with a $10 price target.
At the time this article was published, the author owned shares
of Bidz.
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Disclosure Policy |
