Benchmark Upgrades GSI Commerce To Buy

Benchmark has upgraded GSI Commerce

from Hold to Buy in its latest research report. In the report, Benchmark writes "Holiday ecommerce sales are off to a faster than expected start with the season to date up 12% y/y. We raised our domestic non-travel ecommerce spending estimate for 2010 from $141 billion to $143 billion, representing 10% y/y growth (prior 9%). Categories that drive GSI's revenue including Apparel, Healthy & Beauty, Toys and Sporting Goods should all post solid holiday gains. Although deep discounting, free shipping and price matching promotions remain prevalent, retail sales increased at an annual rate of 7.7% in November, indicating that, despite high unemployment at 9.8%, retail volumes are likely offsetting any pricing weakness, driving sales growth. GSI's comparable store sales could pace at around 20% y/y in 4Q10. We note that GSI's ecommerce contracts include tiered pricing agreements, with higher volumes resulting in incrementally lower take rates for GSI." Benchmark has also raised its price target from $25 to $29 on GSI Commerce, which closed yesterday at $22.41.