Overstock.com "buy," target price raised

12/24/03 - WR Hambrecht & Co

NEW YORK, December 24 (New Ratings) – Analysts at WR Hambrecht maintain their "buy" rating on Overstock.com, Inc (OSTK), while reducing their estimates for the company. The target price has been raised from $18 to $21.

Shares of Overstock.com, an online company selling branded products at discounted prices, are currently trading at $19.09.

According to WR Hambrecht’s research note published this morning, Overstock.com has reported a 75% increase in its gross sales for the Christmas season so far, as compared to the same period last year. The analysts believe that all the segments of the company contributed to the robust results, with impressive higher-margin merchandise sales. The favourable mix of gross merchandize sales (GMS) is expected to boost the company’s gross margins in the near term, the analysts say.

According to WR Hambrecht, increased advertising expenditure has propelled the company’s sales in the December quarter. This incremental expenditure would, however, adversely affect the company’s operating and net margins, the analysts say. The Q4 and 2004 GMS and revenue estimates have been raised from $105 million to $118 million and from $98 million to $112 million, respectively.

The EPS estimates for Q4, 2003 and 2004 have been reduced from -$0.24 to -$0.25, from -$0.81 to -$0.82 and from -$0.06 to -$0.15, respectively.

WR Hambrecht maintains its "buy" rating on Overstock.com.