Market Overview

DA Davidson Downgrades CommerceHub Following Buyout

Share:
Related
Benzinga's Top Upgrades, Downgrades For March 7, 2018
44 Biggest Movers From Yesterday

CommerceHub Inc (NASDAQ: CHUBA), a distributed e-commerce network for retailers and brands, announced Tuesday morning open an agreement to be bought by private-equity firms GTCR and Sycamore Partners for $1.1 billion in cash.

Reacting to the announcement, the stock settled Tuesday's session up about 23 percent at $22.50.

The Analyst

DA Davidson analyst Tom Forte downgraded CommerceHub from Buy to Neutral.

The Thesis

The CommerceHub buyout is a reflection of the significant cash flow the company generates on revenues, Forte said in a note. The deal is due to close in the third quarter of 2018.

"We also see durability in its cash flows as there is a large and growing need for its services among traditional retailers – to increase their assortments by leveraging CommerceHub's large network of drop shipment vendors to more effectively compete against Amazon.com, Inc. (NASDAQ: AMZN)," the analyst said.

Considering DA Davidson's $23 price target, the per-share take-out price of $22.75 seems appropriate, prompting the downgrade, the analyst said.

If the acquisition doesn't go through, DA Davidson sees three potential catalysts over the next 12 months.

  • New client wins, internationally and for grocery;
  • Monetization from new client wins; and
  • Better-than-expected sales due to the secular shift of e-commerce and the implementation of drop shipments strategies to increase virtual inventories.

The Price Action

CommerceHub shares were up about 10 percent over the past year.

Related Links:

Physical Retail Isn't Dying: Here's How To Play It

Report: Amazon Researching A Banking Product

Latest Ratings for CHUBA

DateFirmActionFromTo
Mar 2018DA DavidsonDowngradesBuyNeutral
Oct 2017DoughertyInitiates Coverage OnBuy
Sep 2017DA DavidsonInitiates Coverage OnBuy

View More Analyst Ratings for CHUBA
View the Latest Analyst Ratings

Posted-In: DA Davidson Tom ForteAnalyst Color Downgrades Analyst Ratings

 

Related Articles (AMZN + CHUBA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
AMTDMorgan StanleyUpgrades65.0
APOMorgan StanleyDowngrades34.0
ARMKBairdUpgrades44.0
CGMorgan StanleyDowngrades23.0
EIXEdward JonesDowngrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Analysts: International Paper's Smurfit Kappa Acquisition Could Create Near-Term Difficulties

Ahead Of Kroger's Q4 Report, Two Key Questions From Loop Capital Markets