Raymond James‘s Aaron Kessler today raised his rating on shares of restaurant reservations technology provider Open Table (OPEN) to Outperform from Market Perform, with a $50 price target, writing that risk-reward is more favorable after a 20% sell-off in the stock following a narrow fiscal Q4 beat on February 7th that prompted downgrades from the Street.
Things could improve from Q4′s level, he thinks, when North American restaurant additions seemed particularly weak:
While North America additions are tracking below estimates (we have tracked 427 adds QTD vs. our 750 estimate), we would note that: 1) 1Q has been seasonally weak in prior years and we have seen a pickup in North America adds in February and March; 2) we believe seated diner growth and reservation revenues (~57% of 2012E revenues) is now the more meaningful metric given the increasing penetration of OpenTable restaurants � OpenTable had ~44% of North America ERB penetration in 2011 vs. only 12% seated diner penetration; and 3) we remain comfortable with our 1Q12 revenues of $40.1 million (+18.8% y/y) and non-GAAP EPS of $0.38 (40% y/y).
Shares of Open Table are up 20 cents, or half a point, at $41.26 today.
Previously:
OPEN: Still Top of the Heap, Says Benchmark, March 22nd, 2012.
Fin
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