2023-04-21 09:38:59 ET
In a downgrade coming in tandem with a cut for Big Lots to Sell, Piper Sandler shifted its rating on Overstock.com ( NASDAQ: OSTK ) to Neutral.
Both downgrades cite flagging demand for home furnishings, a key category for sales growth at each company. As such, equity analyst Peter Keith took his rating on Overstock to Neutral and trimmed his price target to $19.
“Demand for home furnishings has deteriorated since March and will likely remain challenged in the months ahead. EBITDA and FCF will likely be pressured as OSTK efficient, asset-light model has few expenses to cut,” he explained. “Given OSTK has few expense cut opportunities (due to its efficient cost structure), we believe continued deterioration in sales will pressure both EBITDA and FCF to breakeven (at best).”
While he said that the valuation remains undemanding, there remains uncertainty in terms of the company’s blockchain investments. Further, Keith sees “weak fundamentals [and] potential for cash burn” holding back a recommendation.
Shares of Overstock ( OSTK ) slumped over 8% shortly after Friday’s market open. Seeking Alpha’s Quant team has long maintained a Sell rating on the stock .
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Overstock cut to Hold as Piper sees weakening home furnishing demand