It can be difficult to find stocks that triple in one year, but Maxim analyst Allen Klee is hoping to see Overstock (OSTK) turn into a three-bagger. Klee initiates coverage of OSTK stock with a Buy rating and 12-month price target of $75, which implies an upside of 188% from current levels. (To watch Klee’s track record, click here)
The analyst highlighted 3 key factors to support his bullish stance:
- We expect a shift in strategy toward profitability for OSTK’s Retail segment will be enhanced by new initiatives. New disciplined advertising spend and focus on the attractive home goods market should yield better results […] We believe the company’s private-label segment and a recovery in Google search leads should also support overall growth and profitability. OSTK is considering selling its Retail segment, which we estimate could be sold at 1.0x sales or over twice the current market cap of OSTK, once the company returns to profitability.
- We are most positive on the company’s tZERO investment, while its other Blockchain investments represent longer-term optionality. The company’s fully owned subsidiary Medici Ventures, has a portfolio of Blockchain technology investments that includes an 80% ownership in tZERO, which is a stock and initial coin offering (ICO) exchange […] A letter of intent has been signed for investments totaling $400 million in tZERO and OSTK, which implies a market valuation for tZERO of $1.5 billion, or $1.0 billion for OSTK’s ownership.
- Attractive valuation. OSTK currently trades at 0.3x our 2019E sales of $2 billion versus the peer group average of 2.4x. Our $75 PT is based on an average of our EV/Sales, DCF, and sum-of-the-parts analysis.
Aside from this rating, OSTK has only received one other analyst rating in the last three months. Five-star D.A. Davidson analyst Tom Forte has a Buy rating on the stock with a relatively bullish $112 price target- suggesting even bigger upside is coming.