Stifel Downgrades RetailMeNot Inc. (SALE) to Sell
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(Updated - September 26, 2016 8:56 AM EDT)
Stifel downgraded RetailMeNot Inc. (NASDAQ: SALE) from Hold to Sell with a price target of $9. Analyst Scott W. Devitt said third-party data suggests third quarter traffic has deteriorated.
Devitt explained, "We are reducing our 3Q:16, FY:16 and FY:17 revenue and core segment operating income estimates reflecting a reduction in our assumption for desktop and mobile visit growth. Third-party data suggests 3Q:16 QTD traffic has deteriorated from recent trends, versus our prior estimates which reflected an uptick from recent trends. Our new estimates are below consensus, though within guidance (for 3Q:16 and FY:16). Shares have increased 33% from the 2Q:16 release (versus flat for the S&P 500) and are currently trading at 7.3x 2017 EV/Adj. EBITDA."
"Our new estimates reflect core revenue growth of 1% in 2017. We believe the recent appreciation in shares is overextended given evidence of weaker current traffic trends and limited 2017 growth expectations. We believe the company is moving in the right direction with the integration of new verticals, new location and attribution tools, and new UI features specifically on mobile which should help offset ongoing declines in the core desktop business. We however maintain that the path back to sustainable growth remains uncertain at this point and shares are discounting the risks from the transition to mobile," added the analyst.
Shares of RetailMeNot Inc. closed at $11.27 yesterday.
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