Feltl And Company Reiterates Buy On ValueVision, Sees 45% Upside For The Stock

In a research report published Tuesday, Feltl and Company analyst Mark Smith reiterated a Buy rating on ValueVision Media (NASDAQ: VVTV) with a $6.50 price target, which represents a potential upside of 45% from where the stock is currently trading.

Smith wrote, “We think the formula for success at VVTV simply comes down to having products that people want. We think basic retailing is key as the company needs to drive improving unit sales by offering a diverse range of proprietary products that consumers want. Mr. Bozek spent significant time discussing the need for proprietary products. VVTV currently has about 25% of its products that are proprietary to SHOPHQ versus approximately 75% at the company’s large competitors. We think a focus on proprietary products will help boost sales and consumer demand. Additionally, management discussed developing more diverse products and personalities within SHOPHQ. We think the company has ample airtime to test new products, vendors and guests.”

Smith continued, “We are maintaining our current estimates. We think the company has begun to show that its strategies are working to expand sales. Over the last two years the company has increased net units shipped at a 24% CAGR and ASP has declined from approximately $100 to the mid $70s. We think there is more the company can do, and the new management team and board are making the proper investments in infrastructure and people to drive sales growth. We note the company just hired a new person to run the Home business who was poached from a large competitor. We think as the company firms up its merchandise mix and improves the products and vendor relationships that sales will grow. We think there is significant leverage in the model and expect high bottom-line growth over the next several years. We think VVTV shares are attractive trading under 8x EV/EBITDA and at 14.5x our F2015 earnings estimate. We derive our $6.50 price target by applying an 11x multiple to our F2015 EBITDA estimate of $30.4mm. Our price target assumes a 21x multiple on our F2015 EPS estimate of $0.31. We think our valuation multiples are warranted given the strong earnings growth in 2014 and 2015. With ample price appreciation potential to our price target, we are reiterating our BUY rating.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Smith has a total average return of -3.1% and a 47.6% success rate. Smith is ranked #2891 out of 3263 analyst.

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