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Why Tile Shop Holdings, Inc. Stock Fell 10% Today

By Anders Bylund - Feb 22, 2018 at 5:12PM

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Wednesday's 28% earnings-based drop was followed by cautious analyst comments on Thursday.

What happened

Shares of Tile Shop Holdings (TTSH 1.81%) closed 10.2% lower on Thursday, hamstrung by analyst reactions to Wednesday morning's disappointing earnings report.

So what

The flooring products specialist's shares plunged 28% lower on Wednesday as the company missed Wall Street's earnings and revenue targets, and the pain kept coming on Thursday when analysts posted their analyses of the report.

At least four analyst firms maintained their "hold" ratings on the stock while giving their price targets some dramatic haircuts. Three targets dropped from $10 to roughly $6.50 each, while Loop Capital reduced Tile Shop's valuation from $8 to $5 per share.

Close-up shot of a few ceramic floor tiles, cracked and damaged.

Image source: Getty Images.

Now what

These gloomy analyst notes cited a difficult turnaround process with some unique headwinds. For example, Loop Capital mentioned fears that Tile Shop's hunt for a lower volume of higher-margin sales may get tripped up by cut-rate imitations that are "good enough" for many cost-sensitive consumers.

According to analyst firm Stifel Nicolaus, 2018 looks like a rebuilding year with limited growth opportunities for Tile Shop.

All four firms stuck to their neutral "hold" ratings on the stock, taking Wednesday's bloodbath into account. All things considered, that looks like a reasonable line of thinking at this point. Tile Shop has a lot to prove in the next few earnings reports.

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