Benchmark Defends 1-800-Flowers, Sees Buy The Dip Opportunity

• 1-800-Flowers.Com Inc FLWS shares have been volatile in 2015 and are down 16 percent year-to-date.
• Benchmark’s Daniel L. Kurnos maintained a Buy rating on the company, with a price target of $14.
• Pressure on shares offer a significant fundamental value opportunity, Kurnos said.

1-800-Flowers shares are under significant technical selling pressure, after the company reported a miss in the September quarter.

Analyst Daniel Kurnos wrote, “This is not the first time Flowers has failed to break a key resistance level following its most meaningless quarter, with shorts further emboldened by negative commentary from the department stores and the length of time between the reported quarter and any updates around holiday sales.”

The F1Q results were impacted by two non-core divestitures in Consumer Floral as well as a shift of nearly $7 million in revenue recognition timing from F1Q to F2Q within the Gourmet Food & Gift Basket segment.

“We think management clearly addressed those issues, noting that the GFGB revenue was already booked and shipped, eliminating the downside risk. We believe Flowers is set up to have a very strong holiday quarter,” Kurnos stated.

There is increased uncertainty around the holiday period. Kurnos added, however, that this does not justify the pressure on shares, considering 1-800-Flowers’ fundamentals have not deteriorated and the company has been consistent in generating double-digit organic EBITDA growth.

“We now consider Flowers as one of our best GARP/value plays and strongly recommend purchasing shares at the current level,” the Benchmark report mentioned.