TZOO rebounds, but Legg Mason says it's dramatically overpriced

| About: Travelzoo Inc (TZOO)

Travelzoo rebounded about 8.5% today to just over $60, following yesterday's 25% decline. But in a research note today, Legg Mason's Thomas Underwood had this to say about the stock:

We rate TZOO Sell with a fair value estimate of $9-$30 per share...

Our valuation analysis as outlined in our initiation note of November 23, 2004, cites a fair valuation of $9-$30 based upon our analysis of Travelzoo's market opportunity. Our opinion is unchanged. Continued good execution by Travelzoo management increases that likelihood in our opinion that fair valuation is towards the upper end of our estimated range.

For 2005, we are increasing our EPS estimate from $0.67 to $0.68. Excluding estimated shareholder settlement charges, we would have increased our annual estimate to $0.71. For 2006, we now estimate EPS of $0.95, up from our prior estimate of $0.90.

We rate shares of Travelzoo Sell.