Susquehanna Maintains a 'Negative' Rating on Blue Nile (NILE) Impressive Execution; However, Valuation Fully Reflects a Turn in 2010

May 8, 2009 9:56 AM EDT

Susquehanna maintains a 'Negative' rating on Blue Nile (Nasdaq: NILE), adjusts price target to $23. : $44.58, Negative; Price Target: $23.00)

Susquehanna analyst says, "Blue Nile reported better than expected revenue and impressive margins as execution on cost, product mix, and commodity pricing offset weak demand. However, we continue to believe that at current levels, NILE shares are expensive relative to a 30% long-term growth rate - already pricing in a solid recovery. Risks related to rising competition - which should persist post recession - are not appropriately factored into the shares, a major concern as competition could cap pricing and free cash flow improvements when the economy rebounds. Finally, even with Blue Nile expecting a bottom in declines after this quarter, we cannot see significant upside to the shares from here considering ongoing fundamental concerns related to the economy, competition, and its valuation - a premium to both historical, sector, and peer averages."

To see more analyst ratings on NILE Click Here.

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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