Shares of Overstock.com (OSTK -5.30%) have skyrocketed today, up by 21% as of 12:15 p.m. EDT, after getting a bullish initiation from Wall Street. Piper Sandler kicked off coverage of the e-commerce company with an overweight rating.
Analyst Peter Keith assigned a price target of $140 on Overstock shares, even as the stock has already gained 1,200% year to date. The COVID-19 outbreak has created a surge in demand for e-commerce tech companies, and Overstock has been able to capitalize on this trend by focusing heavily on its home furnishings category.
"There are seismic forces at work that have dramatically improved the sales and profitability outlook for Overstock (OSTK) well into the future," the analyst wrote in a research note to investors. "These forces include a well-timed refocus of the business on its e-commerce home furnishings business (led by new management), combined with a structural shift in e-commerce home furnishing sales as a result of Covid."
Keith is bullish on new initiatives that CEO Jonathan Johnson has implemented, including the shift to home furnishings. Johnson was appointed chief executive after former CEO and founder Patrick Byrne resigned a year ago over controversial political activities and comments. The new CEO has also improved investor communications and transparency.
"Looking forward we expect the industry backdrop to remain extremely supportive, and [Overstock] has a number of operating initiatives to improve sales/profitability," the analyst added. Keith is modeling for $2.9 billion in 2020 revenue and earnings per share of $0.47 for the year.