Martha Stewart Living on Slippery Footing

The Street seems to have shed its rose-colored glasses when it comes to Martha Stewart Living Omnimedia (MSO Quote). And despite some sharp-looking deals, the squinting could continue well into the near future.

Shares in the company have tumbled hard since the debut of The Apprentice: Martha Stewart, shedding some 35% of their value. Analysts expect MSO to lose 30 cents per share on $40.7 million in revenue when the company reports third-quarter earnings Thursday. Given that the stock remains pricey by a number of measures even after its recent slide, some observers remain dubious about Martha Stewart Living's prospects in coming months.

"At its current price, the stock still appears overvalued," says Bear Stearns research analyst Michael Meltz in a recent research note. He still believes the stock has downside, given expected operating losses and a lack of major positive catalysts. ...