The Knot Gets Upgraded

Investors are loving The Knot (Nasdaq: KNOT  ) today. Can wedding bells be far behind?

Shares of the wedding-planning website opened 8% this morning, after Stifel Nicolas raised its rating, price target, and earnings estimates.

Analyst George Askew is bumping his firm's rating -- from "hold" to "buy" -- and establishing a new $12 price target. He had previously expected a profit of $0.15 a share this year and $0.22 a share come 2011, but now sees $0.15 a share in 2010 and $0.27 a share next year.

The recession has been rough on The Knot. Folks are holding off on getting married until the economy improves. At the very least, they're scaling back on lavish weddings.

Several companies are likely feeling the pinch. Blue Nile (Nasdaq: NILE  ) and Tiffany (NYSE: TIF  ) can't be moving as many diamond engagement rings as they would during merrier times. Martha Stewart is (NYSE: MSO  ) likely taking a hit at its MarthaStewartWeddings.com site that offers everything from floral centerpiece arrangement ideas to bridal registry advice. Upscale hoteliers are also likely coping with a slowdown in ballroom rentals as reception halls. However, all of these companies have other specialties to lean on when wedding aisles collect cobwebs. The Knot isn't as fortunate. It may run specialty sites dedicated to prom dresses, new moms, and breastfeeding, but it lives and dies by the nuptials calendar.

Askew's higher revisions -- and he's also pointing to revenue growth finally accelerating after this recessionary funk -- are comforting. After all, if folks are simply putting off matrimony instead of sidestepping it entirely, The Knot is about to get pretty darn busy with repressed traffic. This may be like the annual Filene's Basement stampede for discounted bridal gowns (if you don't get that reference -- YouTube it. You'll find an estrogen-adrenaline counterpart to Spain's running of the bulls).

It's not just traffic that came flocking to The Knot. Merriman Capital pegged The Knot as a likely buyout candidate, and I couldn't agree more. Cash-rich portals and traffic-hungry media giants are going to do a lot of acquiring in the coming quarters, and The Knot offers a market leader in a niche that attracts a lot of advertiser dollars.

Let them eat wedding cake, I say.

Who do you think will be the next dot-com buyout? Share your thoughts in the comment box below.

The Knot and Blue Nile are Motley Fool Rule Breakers recommendations. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Rick Munarriz got married years before TheKnot.com was around and he regrets that. He could have had a punctual person working the video camera that day. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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