Benchmark Maintains a 'Hold' on Blue Nile (NILE); Customer Acquisition Strategy to Impair Margins

Benchmark maintains a 'Hold' on Blue Nile (NASDAQ: NILE) price target lowered from $30 to $28.

Analyst, Clayton F. Moran, says, "NILE reported weak 4Q11 results with net revenue falling 2% y/y to $112 million, $11 million below consensus, as core engagement revenue fell and international revenue growth slowed...Our 2012 revenue comes up by $7 million to $392 million, up 13% y/y, but our EBITDA estimate comes down by $8 million to $25 million, down 6% y/y, reflecting management’s new strategy. Our 2012 EPS estimate comes down from $1.00 to $0.75. Free cash flow could be $1.01."

"We believe Blue Nile still deserves a premium to peers given its higher margins and virtual inventory model, but suspect the stock may be vulnerable to further multiple compression if revenue growth is not realized."

For an analyst ratings summary and ratings history on Blue Nile click here. For more ratings news on Blue Nile click here.

Shares of Blue Nile closed at $41.83 yesterday.

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