Benchmark Upgrades Blue Nile and Raises PT

Benchmark has published a research report on Blue Nile, Inc. NILE and has upgraded the company to Hold from Sell. In the report, Benchmark writes "We raise our 2011 forecast with revenue potentially rising by 12% y/y to $376 million as consumer spending recovers, although discretionary spending categories may lag the broader industry. Our EBITDA estimate rises from $35 to $37 million, up 16% y/y, with EBITDA margin expanding by 30bps y/y, potentially inhibited by ongoing promotional activity and rising diamond prices. Our 2011E EPS is $1.15. Free cash flow per share could be $1.70. Despite the impressive online holiday season and positive commentary from CEO Diane Irvine citing record Thanksgiving and Black Friday sales – albeit somewhat aided by promotional activity – consensus has remained near the mid-point of fullyear 2010 revenue and EPS guidance of $324-$333 million and $0.94-$0.99, respectively. Given muted expectations, we see limited risk to 4Q10 results." Benchmark has also raised the price target from $31 to $46 on Blue Nile Inc., which closed Friday at $55.46.