Shares of Overstock.com, Inc. (OSTK) skyrocketed 20.5% after the company reported stellar third-quarter results, with both earnings and revenue beating expectations. Despite the ongoing global supply chain disruptions, the company’s well-managed logistics network enabled it to meet the growing demand for its products. Shares closed at $93 on October 28.
Overstock is an American e-Commerce portal offering home products and furnishings at affordable prices. With a market cap of 4 billion, shares have gained 49.5% over the past year. (See Insiders’ Hot Stocks on TipRanks)
Earnings grew 26% year-over-year to $0.63 per share and meaningfully outpaced Street estimates of $0.47 per share.
Additionally, total net revenue declined 4% compared to the prior-year quarter to $689.39 million and also surpassed analyst estimates of $682.83 million.
What’s more, OSTK’s active customers increased 5% compared to Q3FY20, while the company delivered 3.2 million orders in the quarter, declining 22% year-over-year.
Elated with the company’s quarterly performance, CEO Jonathan Johnson said, “Online penetration of the home furniture and furnishings market remains strong and appears to be sticking as customers recognize the broad assortment, value, and ease of shopping for home furniture and furnishings online. We continue to deliver sustainable, profitable market share growth and remain committed to doing so through the remainder of 2021 and beyond.”
Calling OSTK its favorite idea into 2022, Needham analyst Anna Andreeva assigned a Buy rating to the stock with a price target of $150, implying a whopping 61.3% upside potential to current levels.
After speaking with the company’s top brass, Andreeva noted, “Each month improved during 3Q21, and management expects to grow again in 4Q21 and most importantly is comfortable with consensus estimates for sales and EBITDA for ’22 (12% sales and 25% EBITDA growth modeled next year).”
The analyst highlights certain factors for her optimistic view of the stock, namely, a favorable demand backdrop for OSTK’s products, new buyer retention initiatives, low debt levels, a strong balance sheet, and a discounted valuation compared to its peers.
With 3 unanimous Buys, the stock commands a Strong Buy consensus rating. The average Overstock.com price target of $120 implies 29% upside potential to current levels.
Further, TipRanks’ Hedge Fund Trading Activity tool shows that confidence in OSTK is currently Very Positive, as 6 hedge funds increased their cumulative holdings of the stock by 313,500 shares in the last quarter.
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