What happened

Shares of Overstock.com (NASDAQ:OSTK) rose as much as 12% on Thursday. The online retailer and blockchain technology developer enjoyed a rave review from analyst firm DA Davidson.

So what

Davidson analyst Tom Forte maintained his buy rating on Overstock's shares but doubled his target price from $33 to $66 per share. The analyst's sum-of-the-parts stress tests showed that the e-commerce division should be worth approximately $42 per share on its own, and the blockchain family of businesses could add up to $21 per share. Overstock's cash reserves and physical assets account for the remaining $3 per share.

A close-up of a computer keyboard with a shopping cart icon on one key

Image source: Getty Images.

Now what

The main driver of Forte's boosted value view comes from the e-commerce sector, whose value rose to $42 from $9 per share in his previous analysis. Surging online retail trends due to the COVID-19 pandemic played a part in this upgrade, but so did Overstock's revamped business plan under new management and a large contract with the federal government. Forte even argued that his price target might be too conservative since Overstock's peers in the e-commerce sector typically trade at far richer price-to-sales multiples.

One bullish analyst is not the same thing as a successful turnaround story, but DA Davidson's rosy view is joining a growing Greek chorus here. Overstock's shares have gained a thrilling 375% so far in 2020 and an even sharper 1,230% from the market bottom in March.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.