Morgan Stanley Maintains Equal-Weight on Bazaarvoice, Seeks Resolution in Case

In a report published Wednesday, Morgan Stanley analyst Jennifer Swanson Lowe maintained Equal-Weight on Bazaarvoice, Inc.

as they seek a resolution in their current suit with the U.S. Department of Justice. According to the report, earlier this month the court's finding that BazaarVoice's acquisition of PowerReviews violated U.S. anti-trust law. Ahead of the meeting, the DOJ has asked for detailed information regarding PR's former customers, employees, and products within the BV organization, while also noting that the DOJ and BV camps are also considering mediation to assist with the remedy process. “We spoke with BV management following the court's decision, and the company suggested that they view some type of divestiture as the most likely outcome of the remedy phase, although it's unclear what form a divestiture might take,” the report noted. “In his decision, the judge noted that divesting a business 18 months after the merger was completed is not an easy thing to do, and we expect much of the conversation during the next phase of the case to focus on how a divestiture could be structured. We believe PowerReviews is only ~10% of total revenue for BV so the P&L impact should be minimal, the broader question in our minds is what type of resources BV needs to put in to unwinding the transaction, and what level of responsibility BV ultimately has in terms of reestablishing competition in the ratings and reviews space.” BV closed Tuesday at $7.57.