Goldman Sachs Maintains Sell Rating On Barnes & Noble Inc. (BKS)

Barnes & Noble, Inc. BKS, the largest book store in the U.S., recently reported a quarterly loss much wider than expected. The company’s quarterly loss reinforces the concern that the costs of competing in an online arena threaten to outweigh the benefits in any visible timeframe. The company has forecasted only a modest sales growth next year. Goldman Sachs has maintained their sell rating on the stock of Barnes & Noble, Inc. and is reviewing their earnings and price target. Goldman Sachs’s 12-month price target of $16 is based on combination of EV/EBITDA, PE and DCF valuation. A shortfall in the EBITDA forecasts suggests a loss in equity value of $3-$5 per share assuming a 3X EV/EBITDA multiple. The biggest risks Goldman Sachs has taken into consideration are the outcome from activist efforts from investor Ron Burkle, who is challenging the firms share holders rights plan and also tougher results at Borders.