Update: Bazaarvoice Earnings - Nice Pop But Deserves More

| About: Bazaarvoice (BV)


The company beat fiscal 1Q consensus on the top and bottom lines with shares jumping 3% on the news.

We are still bullish on the stock given its growing customer base and unique business more.

The recent beat was within our expectations, but we would have like to see a better market reaction.

Bazaarvoice (NASDAQ:BV) posted fiscal 1Q earnings of a loss of $0.09 a share (topping consensus of a $0.12 loss) and revenues were $46 million (beating $44 million consensus). Its revenues were up 14% y/y, with total clients up 75% y/y for 1Q to 3,000. Active clients are up to close to 1,200.

Shares are down 28% since we first covered the stock back in October, noting that the company was a buy in a bazaar place. At the time we put a $13.50 price target on the stock - suggesting 80% upside. As we noted in October,

The company is in the early stages of completing its software buildout. And so, it's no surprise that earnings continue to run negative. We look for another couple years of negative earnings as the company completes front end migration. On the back-end, the company is already seeing marked improvement, generating 66% gross margins over the TTM.

Also at that time we noted that the DOJ overhang was temporary and the potential divestiture of Power Rankings (which was completed earlier this year) would be a buying opportunity. New product launches continue to drive the outperformance, but analysts remain tepid on fiscal 2015 and 2016 earnings estimates.

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Tagged: , Application Software, Earnings
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