Market Overview Falls 50%, Analyst Reiterates Sell Rating

Share: Falls 50%, Analyst Reiterates Sell Rating

Online postage and shipping software company Inc. (NASDAQ: STMP) reported  first-quarter results that came in better than expected, but issued a big guidance cut. Along with management's commentary, the cut reinforces the bearish case for the stock.

The Analyst

Roth Capital Partners' Darren Aftahi maintains a Sell rating on's stock with a price target lowered from $78 to $35.

The Thesis

Stamps high-margin business has now "pivoted so quickly," Aftahi said in a research report. The company's exclusive relationship with the U.S. Postal Service gave the company a venue to push its platform and gain a commission, but came to an end in late 2018.

In Stamps first-quarter report, the company acknowledged the USPS is renegotiating the negotiated service agreements of several of its reseller partners to make changes to postage spreads. The analyst said this should be viewed as "bad news" for Stamps as it implies a "pure margin" revenue steam will now be compressed. It's possible these spreads can compress even more over the coming years, which implies a "very unclear" EBITDA outlook.

The company's new era of uncertainty makes it "almost impossible" to properly value Stamps stock and investors assuming they are buying value at current levels should "look for other opportunities," the analyst wrote.

Price Action

Shares of were trading lower by more than 48 percent at $43.25 Thursday morning.

Related Links:

Spurned By USPS Denial To End Exclusivity Agreement, Takes Its Ball And Goes Elsewhere

UPS Waives Shipping Fees, Offers Discounts To Woo More Small Business

Latest Ratings for STMP

Oct 2019MaintainsBuy
Oct 2019MaintainsNeutral
Oct 2019MaintainsNeutral

View More Analyst Ratings for STMP
View the Latest Analyst Ratings

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