Angie's List At Risk From Amazon, Wunderlich Argues

In a new note, Wunderlich Securities slashed its price target on Angie's List Inc ANGI by 25 percent to $6, while leaving the stock as a Hold. The move comes just as Amazon.com, Inc. AMZN launched its Home Services solution that will allow users to hire local professionals. Wunderlich points to Amazon's base of 85 million customers and partners as evidence that the company will succeed.

Wunderlich analysts gave Amazon the advantage on its marketplace model, merchandising and customer service, while giving Angie's List the edge on reviews; however, the analysts warned that Amazon could "catch up." Additionally, if Amazon incorporates the Home Services into Prime, it could broaden both products' appeal.

The analysts noted that future growth and profitability will be dependent on Angie's List's platform and profitability, which have yet to see strong "demand from consumers."

The $6 price target is 3 percent below Monday's closing price of $6.20. The price target reflects a lower multiple (20x P/E vs 21x P/E prior). Wunderlich said that it will look for improvements in the company's "marketplace transaction" before becoming more positive the name.