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LoopNet is
scheduled to report their fourth quarter 2008 results after the
market closes on Wednesday, February 11. Based on our analysis,
we at
eChristianInvesting.com are expecting LOOP to report better
than expected results that exceed Wall Street’s expectations.
Analyst
Expectations
We are
forecasting revenues of $21.3 million and EPS of $.12. This
would represent a 9% growth in revenues from last year’s $19.6
million in the same period. The current analyst consensus calls
for revenues of $21.3 million and $.11 EPS. On October 30, the
company provided revenue guidance of $21.0 – 21.3 million.
LoopNet
has continued its strong growth pattern despite the prevailing
tough economic conditions. Our checks showed traffic growth
remained strong in the fourth 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.
Expectations for 2009 are already very muted with Wall Street
only expecting 2% growth. However, assuming economic conditions
do not improve for the remainder of 2009 we would expect full
year revenues to decline slightly. We would expect management to
issue a conservative guidance projection that reflects a slight
decline in revenues or at best flat revenues for the year.
Share
Performance
LoopNet’s
shares are down only 1% since the beginning of the year. Last
year, the shares lost just over half their value compared to the
Dow Jones index’s 34% drop.
Valuation
Shares are
now trading at 14x consensus 2009 EPS estimates. This is below
the relative valuations of their peer group. Despite the strong
economic headwinds that LOOP is facing, we continue to be
positive on both their business model and their relative
valuation. We also note that the company has over $2 per share
in cash with zero debt on their balance sheet.
Recommendation:
Buy with a $9 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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