AmTech Cuts Price Target on Blue Nile (NILE) to $28; Reiterates Sell

American Technology Research lowers its price target on Blue Nile (Nasdaq: NILE) from $33 to $28 and reiterates its Sell rating.

While Blue Nile's Q2 earnings were below the Street estimates, the firm said it is calling the quarter in-line as "The EPS upside came primarily from strong op-ex discipline, although a dramatically lower share count helped a bit as well." AmTech believes the largest source of pressure on Blue Nile's earnings come from continued weakness at its higher price points. Further, AmTech said it does not see a recovery in Blue Nile's average selling price growth until sometime during 2009.

AmTech calls Blue Nile shares "significantly overvalued" as it is currently trading at almost 40x the Street's FY08 EPS estimates, but has not shown EPS growth this year (0% in 2008). The firm says it is anticipating "another leg down in shares" of Blue Nile and would be sellers, "especially on any strength."

Shares of Blue Nile are currently down $1.28, or 3.24%, to $38.24. AmTech's new $28 price target represents a potential decline of more than 25% from current levels.

Blue Nile, Inc. operates as an online retailer of diamonds and fine jewelry in the United States, the United Kingdom, and Canada.

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