J.P Morgan is upgrading Blue Nile NILE to Neutral as it expects the company to benefit from an increase in consumer spending and consolidation in the industry. It is also
raising estimates, and its December 2011 price target goes to $49 from $39.
While Blue Nile's 3Q was below expectations, on the earnings call the company noted acceleration in both traffic and sales growth thus far in 4Q. Additionally, management commented that Blue Nile had a record Thanksgiving and Black Friday, in terms of both sales
and traffic. J.P Morgan is slightly raising its 4Q revenue growth estimate to 9% from a prior estimate of 8%.
J.P Morgan now expects 4Q revenue, EBITDA and GAAP EPS of $112.2M, $12.3M and $0.42, compared to our prior estimates of $111.1M, $12.1M and $0.41, respectively. However, despite the increase in estimates, it thinks the stock is still expensive, hence the Neutral rating.
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