Equity investors sold out of a wide range of titles on Tuesday, but they really sold out of Overstock.com (BYON 0.48%). The internet discount retailer's shares took a more than 8% hit on the day, due mainly to a price target cut from an influential bank. Somewhat inconveniently, this occurred one day before the company was slated to publish its latest quarterly earnings.
The cutter was Bank of America Securities analyst Curtis Nagle, who on Tuesday chopped his Overstock.com target to $80 from the previous $100 for a fairly steep 20% trimming.
Although Nagle is maintaining his buy recommendation on the retailer's shares, his price cut is the second from analysts in as many trading days. On Friday, Piper Sandler's Peter Keith made a more drastic one, lowering his price target to $85 from the preceding $140.
Keith cited conversations with home furnishing suppliers and associated businesses as a key reason for the downward adjustment. These discussions indicate to him that demand for home furnishings started to weaken in the fourth quarter of last year, and has declined since then.
However, like his Bank of America colleague, Keith is maintaining his overweight (buy) recommendation on Overstock.com.
Understandably, investors tend to get spooked when an analyst or two cuts a price target on a stock. It's telling, though, that both Nagle and Keith are holding on to their buy tags on Overstock.com.
Many analysts still believe the retailer is poised for growth; collectively, they are anticipating a 50% year-over-year improvement in per-share earnings (to $0.39) for the fourth quarter, although they believe sales will fall by nearly 6%.
Overstock.com is scheduled to hold a conference call to discuss those earnings tomorrow morning, Wednesday, Feb. 23.