Citi Maintains a 'Hold' on Blue Nile (NILE), Worst May Be Behind

May 8, 2009 1:06 PM EDT

Citi maintains a 'Hold' on Blue Nile Inc (Nasdaq: NILE), but raises price target from $36 to $50.

Citi analyst says, "Positive Outlook Suggests The Worst May Be Behind - An upbeat NILE management team again chose not to provide specific Q2 or full year guidance, but did disclose that it expects continued improvement throughout 2009 with Y/Y growth in Q4 (vs. Street at -1% Y/Y), and full year EBITDA above 2008. The company did not comment on intra-quarter trends, but given positive linearity in the quarter, we believe it is safe to assume that the Y/Y decline exiting Q1 may have been single digits. Key point here: Street estimates are going up...Gaining share vs. weakened industry...Gross margin AND EBITDA margin expansion...Average Order Size up 2% Y/Y, and Units were in-line...Balance Sheet remains relatively strong, share buybacks still on hold."

Blue Nile, Inc., is an online retailer of diamonds and jewelry in the United States. In addition to sales of diamonds, fine jewelry and watches, the Company provides guidance and support to enable customers to more effectively learn about and purchase diamonds as well as classically styled fine jewelry.

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