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Stamps.com Falls 50%, Analyst Reiterates Sell Rating

Jayson Derrick

Online postage and shipping software company Stamps.com Inc. (NASDAQ: STMP) reported  first-quarter results that came in better than expected, but issued a big guidance cut. Along with management's commentary, the cut reinforces the bearish case for the stock.

The Analyst

Roth Capital Partners' Darren Aftahi maintains a Sell rating on Stamps.com's stock with a price target lowered from $78 to $35.

The Thesis

Stamps high-margin business has now "pivoted so quickly," Aftahi said in a research report. The company's exclusive relationship with the U.S. Postal Service gave the company a venue to push its platform and gain a commission, but came to an end in late 2018.

In Stamps first-quarter report, the company acknowledged the USPS is renegotiating the negotiated service agreements of several of its reseller partners to make changes to postage spreads. The analyst said this should be viewed as "bad news" for Stamps as it implies a "pure margin" revenue steam will now be compressed. It's possible these spreads can compress even more over the coming years, which implies a "very unclear" EBITDA outlook.

The company's new era of uncertainty makes it "almost impossible" to properly value Stamps stock and investors assuming they are buying value at current levels should "look for other opportunities," the analyst wrote.

Price Action

Shares of Stamps.com were trading lower by more than 48 percent at $43.25 Thursday morning.

View more earnings on STMP

Related Links:

Spurned By USPS Denial To End Exclusivity Agreement, Stamps.com Takes Its Ball And Goes Elsewhere

UPS Waives Shipping Fees, Offers Discounts To Woo More Small Business

Latest Ratings for STMP

Date Firm Action From To
May 2019 Reiterates Sell
May 2019 Downgrades Buy Hold
May 2019 Downgrades Buy Neutral

View More Analyst Ratings for STMP
View the Latest Analyst Ratings

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