Caris' Boyd Downgrades Bankrate While Outlining Ways the Stock Can Outperform

Caris & Co.’s Tim Boyd today dropped his rating on Bankrate (RATE) to Average from Above Average, noting that the shares ralled 25% since he upgraded the stock on October 26 while the shares were trading at $32. Boyd says he remains positive on the company’s growth outlook, but that “we no longer view the shares as attractive on a risk/reward basis.” His price target on the stock remains $39.

He does, however, lay out three ways the stock could outperform in the next 6-12 months:

1. The company’s FastFind mortgage quote service “gets back on track more quickly than we expect.” He notes that pricing from lenders has gone down due to a “lead glut” he blames on IAC Interactive’s (IACI) LendingTree and privately owned LowerMyBills.
2. If BankRate increases pricing on cost-per-click and graphical ads beyond what he now expects, “there could be upside to our estimates.
3. Another possibility: higher traffic growth rates driven by search engine marketing initiatives.

Bankrate shares closed down 45 cents today to $40.07.

RATE 1-yr chart: