Dougherty & Co Downgrades ValueVision Media (VVTV) to Neutral, Cuts Price Target & Estimates Following New Outlook
Tweet
Share
E-mailGet Alerts VVTV Hot Sheet
Price: $6.08 --0%
Rating Summary:
5 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
Rating Summary:
5 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
Join SI Premium – FREE
Dougherty & Co downgraded shares of ValueVision Media (NASDAQ: VVTV) to a Neutral rating from its previous rating of Buy and cut its price target from $5 to $3 following the release of preliminary third quarter results.
The company is now forecasting a 2 percent increase in revenues for the quarter, well below the 8.2 percent increase the firm was previously estimating. Dougherty noted the downside was due to 23 percent decline in consumer electronic sales and a 12 percent decline in watch sales.
Gross margin is also now expected to fall 140 bps year over year to 35.6 percent. It is able to remain steady given the company's strong product mix. EBITDA is now expected to fall between a loss of $700 thousand to a loss of $500 thousand, well below the firm's prior estimate of $1.5 million.
An analyst at Dougherty comments, "The fact that VVTV chose to pay up for improved channel positioning raises the possibility the “if you build it, they will come” philosophy is faced with the reality that merchandising alone may not attract a critical mass of customers. Prospective customers must be able to conveniently find your content and this comes at a cost. VVTV has been clear that an 18 million home contract expires at the end of 2012 and it believes annual cost savings of $15 million+ are available. We suspect VVTV loses money on these homes, which provides it negotiation leverage as it could walk away and make more money. While we have not modeled for this cost reduction, the fact that VVTV paid for improved channel positions contradicts our previous assumption that deflationary cable fees would enable VVTV to achieve improved channel locations at flat to lower expense levels."
To go inline with the company's new outlook and performance, Dougherty is reducing its full year 2011 revenue estimate from $613.6 million to $580.6 million and its EBITDA estimate from $11.4 million to $1.4 million. For 2012, the firm is cutting its revenue estimate from $665.6 million to $618.7 million and its EBITDA estimate from $20.6 million to $0.4 million.
Dougherty has also lowered its 2013 revenue estimate from $722.0 million to $659.5 million and its EBITDA estimate from $30.7 million to $3.9 million.
For more ratings news on ValueVision Media click here and for the rating history of ValueVision Media click here.
Shares of ValueVision Media closed at $2.13 yesterday.
The company is now forecasting a 2 percent increase in revenues for the quarter, well below the 8.2 percent increase the firm was previously estimating. Dougherty noted the downside was due to 23 percent decline in consumer electronic sales and a 12 percent decline in watch sales.
Gross margin is also now expected to fall 140 bps year over year to 35.6 percent. It is able to remain steady given the company's strong product mix. EBITDA is now expected to fall between a loss of $700 thousand to a loss of $500 thousand, well below the firm's prior estimate of $1.5 million.
An analyst at Dougherty comments, "The fact that VVTV chose to pay up for improved channel positioning raises the possibility the “if you build it, they will come” philosophy is faced with the reality that merchandising alone may not attract a critical mass of customers. Prospective customers must be able to conveniently find your content and this comes at a cost. VVTV has been clear that an 18 million home contract expires at the end of 2012 and it believes annual cost savings of $15 million+ are available. We suspect VVTV loses money on these homes, which provides it negotiation leverage as it could walk away and make more money. While we have not modeled for this cost reduction, the fact that VVTV paid for improved channel positions contradicts our previous assumption that deflationary cable fees would enable VVTV to achieve improved channel locations at flat to lower expense levels."
To go inline with the company's new outlook and performance, Dougherty is reducing its full year 2011 revenue estimate from $613.6 million to $580.6 million and its EBITDA estimate from $11.4 million to $1.4 million. For 2012, the firm is cutting its revenue estimate from $665.6 million to $618.7 million and its EBITDA estimate from $20.6 million to $0.4 million.
Dougherty has also lowered its 2013 revenue estimate from $722.0 million to $659.5 million and its EBITDA estimate from $30.7 million to $3.9 million.
For more ratings news on ValueVision Media click here and for the rating history of ValueVision Media click here.
Shares of ValueVision Media closed at $2.13 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- HSBC Downgrades Feng Tay Enterprises (9910:TT) to Hold
- Piper Sandler Downgrades Magnolia Oil & Gas Corp. (MGY) to Neutral
- Morgan Stanley Downgrades Befesa SA (BFSA:GR) to Underweight
Create E-mail Alert Related Categories
DowngradesSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
