On Monday, DA Davidson revised its price target for 1-800-FLOWERS.COM (NASDAQ:FLWS), reducing it to $9.00 from the previous $9.50, while maintaining a Neutral stance on the stock. This adjustment comes after the company reported earnings for the third fiscal quarter of 2024 that did not meet consensus expectations. The report highlighted a decrease in e-commerce sales by 5% and a significant 35% drop in wholesale, attributed to retailers stocking less during the Easter period.
The company, known for its stability, has taken the unusual step of reducing its workforce, which is expected to decrease general and administrative expenses by approximately $10 million annually starting in the fourth fiscal quarter of 2024. This move is a response to the ongoing sales decline, which may persist into the fiscal year 2025 due to a weak consumer environment.
DA Davidson has adjusted its forecast for the company's sales and earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fiscal year 2025. The firm now expects a 2% year-over-year decline in sales, a shift from the previously projected 3% increase. Additionally, the EBITDA estimate has been moderated to a 5% growth from the earlier expectation of an 11% rise year-over-year.
The new price target is based on a 5.5 times multiple of the company's projected calendar year 2025 EBITDA, which has been lowered to $109 million from the prior estimate of $118 million. The revised figures reflect DA Davidson's anticipation of the company's financial performance in the light of current and expected market conditions.
InvestingPro Insights
As investors digest DA Davidson's revised price target for 1-800-FLOWERS.COM, insights from InvestingPro provide a broader perspective on the company's financial health and market performance. With a market capitalization of $578.54 million and a challenging P/E ratio of -75.82, FLWS's valuation reflects investor skepticism about its current profitability. However, the company's strong free cash flow yield, as indicated by InvestingPro, suggests potential for value generation. Analysts predict a return to profitability this year, despite expectations of a sales decline.
InvestingPro Tips highlight that while analysts have revised their earnings expectations downwards, FLWS's liquid assets surpass short-term obligations, indicating a degree of financial resilience. The stock's volatility remains a factor for investors to consider. For those looking to delve deeper into the company's prospects, there are 10 additional InvestingPro Tips available, offering a comprehensive analysis of FLWS's financial and market position.
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