(By Balachander) OpenTable Inc. (NASDAQ: OPEN) shares were downgraded to "perform" from "outperform" by Oppenheimer based on valuation.
Oppenheimer believes the stock has run ahead of itself and any delay in the roll-out of its cloud-based ERB or increased costs will pressure the shares.
Meanwhile, third-party data has limited correlation, creating limited fundamental visibility, Oppenheimer said.
"However, we think there could be short-term risk to the upside as 1) the float is 30 percent short and 2) valuation is still at a discount to AWAY," the brokerage wrote in a note.
"Company history suggests cloud-based ERB roll-out could take time. At a recent competitor conference, mgmt admitted that their technology initiatives were still in the early innings," Oppenheimer said. "Given the company's engineering constraints (six qtrs to integrate toptable), we believe the cloud roll-out would impact 2H:13, at the earliest."
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Oppenheimer's price target remains unchanged at $54.
The brokerage expects in-line 4Q and forecasts revenue, EBITDA and non-GAAP EPS increasing 14 percent, 15 percent and 22 percent y/y, respectively. Revenue and EBITDA are in line with guidance/consensus, while non-GAAP EPS is 5 percent above the Street.
Note that guidance assumed a 2 percent impact from Sandy, suggesting the Street will be looking for an acceleration in guidance, the brokerage said.
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The San Francisco, California-based company provides online restaurant reservations, seating roughly 10 million diners per month via online bookings across more than 26,000 restaurants.
The stock, which has been trading in the 52-week between $33.53 and $55.95, dropped 4.03 percent to trade at $52.66 on Wednesday.