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Overstock.com (NASDAQ:OSTK) shares slipped on Friday as Jefferies started coverage with a warning that short-term headwinds should stifle upside in 2023.
Over the longer-term, equity analyst Jonathan Matuszewski said that he still believes the company can promote gains via its strong e-commerce penetration and focus on home furnishings. In due time, the company is likely to gain market share in his view. However, this upside is not likely to flow through soon, according to his analysis.
“We see the stock rangebound in the months ahead with allure of a self-help story more than neutralized by a grim near-term backdrop for discretionary consumer durables, like
furniture & home furnishings,” Matuszewski wrote. “As such, while we believe Overstock’s strategic initiatives will drive shareholder value over time, early benefits will be offset by a receding active customer file and fewer orders per active customer.”
He added that consumer trade-down is likely to temper margins and sales as big-ticket items prove hard to move off shelves. These impacts are expected to adversely impact the upcoming quarterly report due in February as well, while eschewing the idea of a “clearing event” in the earnings release.
Matuszewski assigned a $20 price target to the stock alongside his Hold rating. Shares of Overstock (OSTK) slipped 4.22% in afternoon trading on Friday.
Read more on Needham Securities’ recent downgrade of the stock.
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