2014 was a big year for e-commerce sites, with Alibaba (NYSE: BABA) famously releasing its record-breaking IPO and Amazon (NASDAQ: AMZN) also reporting all-time highs during the holiday season. It seems there is a new competitor in town, though its business has yet to hit the United States.
Cnova N.V. (NASDAQ: CNV) is an e-commerce site with a notably strong presence in France and Brazil and almost 13 million active customers. The site has over 20 brands that cater to North West Africa and South America, serving a total of 9 countries and 530 million consumers. Cnova went public in November, selling 26.8 million shares for $7 each; well below the target range of approximately $13 a share.
On January 2nd, analyst Stephen Ju of Credit Suisse initiated coverage on Cnova with an Outperform rating and a $13 price target. Ju compared Cnova to Amazon (NASDAQ: AMZN), noting that the company also “launched a third-party marketplaces platform in France and Brazil.” The analyst pointed out that Cnova will launch Casas Bahia, a home goods store, and Pontofrio, a wholesale electronic retailer, in the first quarter of 2015. Both sites have strong bases in Brazil, and Ju noted that “Given the net versus gross accounting for marketplaces, this should confer benefits to Cnova’s gross and operating margins, which we expect to expand from the current 14.4% to 19.4% over the next five years.”
Stephen Ju has a 58% overall success rate recommending stocks and a +12.7% average return per recommendation.
However, not everyone is as bullish on the stock. On December 30th, analyst Ross Sandler of Deutsche Bank initiated coverage on Cnova with a Hold rating and a price target of $8.50. Sandler noted many risks of investing in Cnova, including “a fair amount of volatility around key financial milestones across GMV, revenue, GP and EBITDA.” Additionally, the analyst noted that the “company has yet to turn meaningfully profitable” and that “consensus estimates assume healthy re-acceleration in growth and higher margins which we rarely see in consumer internet, and leaves little room for upward revision.” He noted potential upsides to his hold rating, such as “upward estimate revisions” and “increased confidence in CNV’s public market track record.” Sandler concluded, “We think 4Q is tracking solid on the GMV line, but have little visibility on EBITDA and GP flow through.”
Ross Sandler has a 56% overall success rate recommending stocks with a +11.5% average return per recommendation.
On average, the top analyst consensus for CNV on TipRanks is Moderate Buy.