VITC Well-Positioned To Sustain Top-line Growth And Expand Margins
Analysts at Benchmark maintain their "buy" rating on Vitacost.com (NASDAQ: VITC). The target price for VITC is set to $14.
According to Benchmark, VITC “appears well-positioned to sustain its 30% plus top-line growth and increase margins as it gains both market share and scale advantages.” “Management's plan to double SKUs from 30k to 60k, combined with significant distribution center upgrades, both due to be completed by year-end, could lead to 40% y/y growth in EBITDA in 2010,” the analysts say.
Benchmark believes that the expiration of the lock-up period for Vitacost.com on March 23 continues to pose as an “overhang on the shares of Vitacost.” “Founder Wayne Gorsek, who holds 4.8 million shares, and some of his friends and family “angel” investors who represent several million additional shares, may want to sell more of their stock soon,” the analysts mention.
“Expanded product offerings should help drive new customer wins and average order value, leading to an estimated 31% y/y revenue growth to $251 million in 2010. Improving internal efficiencies could also help drive EBITDA growth of 40% y/y to $34 million, which translates into EBITDA margin expansion of 90bps y/y. We expect 2010 EPS of $0.61,” the analysts add.
