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Blue Nile’s (NASDAQ:NILE) gem of a first-quarter earnings report late Thursday spurred a flurry of upbeat commentary from the Street, with several analysts making major revisions in their price targets for the online diamond merchant. Even the bears found little to grouse about, and the stock Friday morning is posting a fat gain.

As Tiernan Ray reported in a previous post, Q1 results topped expectations at both the revenue and EPS line, and guidance exceeded expectations.

  • Barclays Capital analyst Douglas Anmuth repeated his Overweight rating on the stock, and lifted his price target to $52 from $30. “We expect NILE to continue gaining share both online and offline during this challenging period and then to return to double-digit top-line growth in a more normalized macro environment,” he writes. Anmuth ups his 2009 EPS estimate to 74 cents a share from 66 cents.
  • Citigroup’s Mark Mahaney repeated his Hold rating, but raised his target to $50, from $36. He upped his 2009 EPS estimate to 83 cents, from 80 cents; for 2010 he goes to $1.23, from $1.16. He writes that fundamentals are likely to continue to get less worse in the second half, noting that comps get easier through 2009; he adds that a correction in diamond prices benefits both revenue and margins. He also observes that NILE will benefit from the shutdown of almost 1,400 U.S. jewelers in 2008, with potentially an even larger number of closures in 2009. But he thinks most of that has been factored into the stock.
  • Bank of America/Merrill Lynch analyst Lorraine Hutchinson repeated her Underperform rating on the stock, but pushed up her price target to $33, from $16. She lifted her 2009 EPS target to 83 cents, from 52 cents. “Lower diamond prices have created better demand for NILE’s engagement jewelery, as NILE provides more immediate market pricing for customers than other jewelers who buy diamonds well in advance,” she writes. “This should continue to help stabilize sales and grow margins, as some of the savings are passed on and some are benefiting gross margin.”

NILE closed up Friday $2.52, or 5.6%, to $47.10.

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Source: Blue Nile Q1: Targets Raised on Strong Performance