Barclays Capital analyst Mark May better be prepared to be seated by the noisy kitchen door the next time he books a dining reservation through OpenTable
Shares of the online dining reservations specialist tumbled 9% after May lowered his price target and downgraded the stock.
In slashing the stock's rating from "overweight" to "equal weight," May established $43 as OpenTable's new price target. It was previously perched at $50.
I'll pause now for a few seconds so you can come up with your own joke about an overweight rating on the dining reservations leader.
OpenTable has been able to overcome competitors that are both real and imagined. IAC's
So what's eating May? Well, his channel checks show that reservation growth slowed in the quarter that just ended. He feels that weak industry trends may find OpenTable posting its first ever sequential dip in quarterly revenue.
It's a brazen suggestion, but it's not outrageous. OpenTable has been pushing cheaper options to restaurants that don't need all of the company's bells and whistles. May feels that OpenTable will earn just $1.47 a share this year and $1.60 a share come 2013, well below the consensus average of $1.57 a share and $1.90 a share, respectively.
The neat thing about a bold call like this is that it won't take long to see if May's right; OpenTable reports its second-quarter results during the first week of August.
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Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.