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Liquidity Services (NASDAQ:LQDT) shares were lower Monday after Pacific Crest’s Steve Weinstein cut his rating on the company to Underperform from Market Perform.

Weinstein says the company, an online liquidator of surplus goods, is tracking below expectations in the current quarter. For the fiscal third quarter ended June, he expects gross merchandise value of $61 million to $63 million, above management’s forecast of $58 million to $60 million. He sees pro forma EPS for the quarter in line at 12 cents.

However, he also says fiscal fourth quarter GMV is tracking to $60 million to $62 million, or $3 million to $5 million below expectations. Weinstein cut his EPS estimate for the September 2007 fiscal year to 43 cents from 44 cents; for FY ‘08 he goes to 55 cents from 59 cents.

Weinstein says the stock is overvalued; he sees downside risk to $14. Liquidity Services is down 94 cents, or 5.6%, to $16.07.

LQDT 1-year chart

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Source: Liquidity Services: Liquidate Your Position