UPDATE: Benchmark Company Reiterates Buy Rating, Lowers PT on Liquidity Services as DoD Overhang Still Looms but Risk is Reflected in Share Price

In a report published Friday, Benchmark Company analyst Daniel L. Kurnos reiterated a Buy rating on Liquidity Services (NASDAQ: LQDT), but lowered the price target from $33.00 to $27.00.In the report, Benchmark Company noted, “Shares of Liquidity Services (LQDT-Buy) fell 20% yesterday following underwhelming F4Q profit results, a highly conservative F1Q15 (December) outlook, and lower-than-expected FY15 EBITDA guidance. The profit reduction and soft outlook were primarily attributable to a mix shift in Surplus to lower value, higher cost goods and an incremental $7-$9 million investment in technology and personnel. We also believe the F1Q15 outlook assumes at least a 15% y/y decline in core Commercial GMV due to lower inventory flows, a deliberate shift away from the purchase model, and headwinds in the Consumer Electronics vertical, although management admitted they were not modelling in the seasonal uptick in December. Furthermore, FY14 guidance does not include any impact from the ongoing RFP process. We have assumed what we believe is a very conservative stance, but shares still trade at only 7x our FY14E EV/EBITDA, and management's call for GMV to reach $2 billion in 4-5 years implies a 15% GMV CAGR. We understand investor hesitance to get involved prior to further clarity on the DoD issue, but believe shares already reflect more than a fair potential negative impact.”Liquidity Services closed on Thursday at $21.13.