Deutsche Bank Reiterates Buy Rating on GSI Commerce (GSIC)

Deutsche Bank is out with a research report this morning, where it reiterates its Buy rating on GSI Commerce (NASDAQ: GSIC); it has a $32.00 price target on the stock.

The DB analysts said, “We reiterate our BUY rating on GSI as we think it is well positioned to benefit from the growth intersection of e-commerce and online marketing. We expect solid 2Q results across its businesses and focus will be on growth ex-acquisitions, which should outperform, while 3Q guidance should be conservative as expected (seasonal low on profits), especially as the company prepares its 85+ partners for the holiday season. Sentiment remains a bit mixed recently on competitive concerns which we see as overblown/highly speculative.”

They added, “For 2Q, we are modeling revs of $262.5mn (+40%Y/Y) and EBITDA of $11.5mn. Recent acquisitions should collectively add about $3.8mn in revs and $450k in EBITDA. So collectively, given that management has generally been conservative, we think the buy-side is looking for $268mn and $14mn in EBITDA as the likely hurdle for the stock to move higher vs. management guide of $260mn/$10mn in revs/EBITDA. Similar to previous years, we also expect GSI to ramp up customers in preparation for the holiday season as the third quarter marks the company’s lowest EBITDA profits as it ramps up hiring in its facilities. As such, we expect conservative guidance for the company and expect a guidance range of $267mn-$277mn/$10mn-$12mn in revs/EBITDA inclusive of recent acquisitions.”

They closed by saying, “Our $32 price target is based on 13x our 2011 EBITDA estimate of $170mn. This multiple is at a premium to the e-commerce enabler group trading at 11x 2011 EBITDA estimates given its diversified client base with long term contracts.”