UPDATE: Deutsche Bank Initiates Coverage On Cnova

Ross Sandler of Deutsche Bank initiated coverage of

on Tuesday with a Hold rating and $8.50 price target. Cnova is the seventh-largest e-commerce site globally, with a strong presence in France and Brazil with several emerging market opportunities. “The unique competitive advantages born from the Casino Group parent company relationship should also Cnova to continue to gain market share,” Sandler wrote. The analyst adds that the relationship affords the company a price advantage from proprietary supplier deals, resulting in an accelerating gross margin over time. According to Sandler, the company is “unique among the global e-commerce peer group” given its strong presence in Brazil where e-commerce has a very low penetration of retail and should grow for some time. Bottom line, Sandler states that the company's fourth quarter margins are “tracking solid” but there is little visibility on EBITDA and gross profit flow through. As such, a Hold rating and $8.50 price target is justified and reflects a multiple that is similar to its closest peer B2W, but slightly below other e-commerce sites like

.