Shares of online retailer Overstock.com (NASDAQ:OSTK) jumped 15% today as of 3:50 p.m. EDT. The stock has been on a bit of a roller coaster ride just over the past few trading sessions, with increases as much as 20% and drops over 10%.
Today, a Needham & Company analyst initiated coverage with a buy rating and a $96 price target, representing more than a 20% upside even after today's pop.
Analyst Rick Patel said his buy rating is based on the secular acceleration in digital retail sales that is occurring this year. He believes that the strength in the home category driven by stay-at-home restrictions related to the COVID-19 pandemic will continue.
Patel added that the company should benefit from higher margins as revenue growth leverages expenses. The analyst also mentioned the "optionality" of non-core businesses. A 20% share price gain last week was driven by one such business.
Overstock has momentum going on two fronts. Strength in the core online retail business has mostly contributed to the share price being up over 960% year to date. But the company also has blockchain and cryptocurrency subsidiaries.
Last week, its cryptocurrency subsidiary, tZERO, gained approval from the Financial Industry Regulatory Authority (FINRA) to launch a retail broker-dealer subsidiary. tZERO Markets will now be able to offer retail brokerage services for digital securities, and will also provide investment banking and capital-raising services.
Today's share price move may be as much a continuation of the optimism related to its cryptocurrency subsidiary as it is a reaction to new analyst support.