XO Group Inc. shares sank Friday after the wedding, newlywed and pregnancy website operator reported mixed results for its fiscal first quarter.
THE SPARK: XO Group reported Thursday that it earned $1.7 million, or 7 cents per share, for the quarter that ended March 31. That compares to $397,000, or 2 cents per share, in the same quarter last year.
Revenue increased 2 percent to $30.3 million, as growth of its publishing and local online business offset declining revenue from its merchandise business.
THE BIG PICTURE: The company, headquartered in New York, operates online wedding brand The Knot, pregnancy brand The Bump and sites such as weddingchannel.com.
The company said it is focused on balancing its investments with profitability.
THE ANALYSIS: Stifel analyst George Askew downgraded XO to "Hold" from "Buy," citing continued underperformance of its e-commerce business, and the stock price meeting his previous target.
He said the company's e-commerce revenue fell 31 percent. Askew thinks the challenges there are due to the significant complexity for a relatively small company, which means higher risk.
SHARE ACTION: Down $1.11, or 9.5 percent, to $10.62 In afternoon trading. The stock has a 52-week trading range of $7.22 to $11.84.