RBC Capital Downgrades Liquidity Services (LQDT) to Sector Perform

RBC Capital downgraded Liquidity Services (NASDAQ: LQDT) from Outperform to Sector Perform with a price target of $15.00 (from $30.00) saying the company is entering a tunnel of stagnation.

Analyst Mark Mahaney cited, "1) Our dramatically reduced estimates and our valuation framework point to very limited valuation upside; 2) LQDT’s cost structure (tech investments, incremental spend to match uncertain DoD inventory) might become too heavy for ongoing GMV headwinds; 3) LQDT continues to face a DoD concentration risk (Scrap contract expires June 2015, inventory for current Surplus contract might require longer babysitting, new Surplus contract inventory might have unfavorable unit economics). However, all in, while we think the reverse supply chain and liquidation marketplace presents a clear long-term growth opportunity, we will step to the sidelines until management builds back credibility with consistent and predictable execution."

the firm's F2014 GMV & EBITDA est. decline by 9% and 28%, in line w/ company guide.

For an analyst ratings summary and ratings history on Liquidity Services click here. For more ratings news on Liquidity Services click here.

Shares of Liquidity Services closed at $12.17 yesterday.

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