Liquidity Services Falls 6% After Named High Bidder for DoD Surplus Assets

Shares of Liquidity Services LQDT are lower by 4.8 percent to $21.25 following news the company was the high bidder for a contract with the U.S. Defense Logistics Agency to purchase, manage, and sell non-rolling stock surplus assets of the U.S. Department of Defense (DoD). The new contract is for 4.35 percent fee of the DoD's original acquisition value, up from the current rate of 1.8 percent. As a result, 2015 EBITDA will be cut by ~$30-35 million, or 32 percent, according to Bank of America. There could be additional downside as rolling stock contract could possibly switch to a revenue share with a competitive auction process, said the bank. The firm maintained a Underperform rating on the stock.