UPDATE: Singular Research Initiates Coverage on Angie's List on Multiple Risk Factors

In a report published Wednesday, Singular Research analyst Thomas Kerr initiated coverage on

with a Sell rating and $11.00 price target. In the report, Singular Research noted, “Angie's List operates a web-based service for members to research, rate, hire, and review local professionals for home, health care, and automotive service needs. ANGI's high valuation is excessive considering the low barriers to entry, legacy competition, and limited advertising spends from local businesses. The company's revenue growth depends on advertising from its participating local service providers which is dependent on a rapidly growing paid membership base. The high member churn rate raises growth concerns. ANGI will not generate positive operating profits, net profits or EBITDA for FY:13. If ANGI becomes profitable in FY:14 as expected, investor focus will shift to margins and levels of profitability, which may not be good for valuations. Although still showing very strong growth rates across most metrics, many of those growth rates have been decelerating recently.” Angie's List closed on Tuesday at $21.43.