Another onetime dot-com highflier boosted its profit predictions Monday, but this time around few people cared.
Just a week after
reported its long-awaited first-ever profit, another perennial money-loser,
, also reported much better than expected fourth-quarter results.
I Want a New Drugstore
Like Amazon, Drugstore has been slowly drying up the steady flow of red ink from its core operations, as measured by pro forma financial statements that exclude certain expenses from the profit-and-loss calculation. And like Amazon, Drugstore has seen its beaten-down stock rally in recent weeks as investors speculated that fourth-quarter numbers would be strong. The connections don't stop there: Amazon is Drugstore.com's largest shareholder, and the widely celebrated bookseller's CEO, Jeff Bezos, sits on Drugstore's board.
But unlike Amazon, whose prospects remain a topic of hot debate, Drugstore.com's doings now rate barely even a mention on Wall Street. Though the stock inched up 5% in midday trading Monday, neither of the analysts who now cover it were moved to upgrade it or boost their earnings targets; neither rate it a buy. As many as 11 firms once covered the stock, which came public in a 1999 IPO and traded north of $60 before collapsing in typical dot-com fashion.
For the fourth quarter, Bellevue, Wash.-based Drugstore.com reported sales of $43.5 million, much higher than the consensus revenue estimate of $36.1 million, according to Thomson Financial/First Call. It narrowed its loss to 22 cents a share from 45 cents a share a year ago, 6 cents better than the consensus estimate.
"Our fourth-quarter results demonstrate that we can be both a high-growth retailer and drive significant operating improvements in many areas from increasing gross margin to reducing costs that benefit the bottom line," CEO Kal Raman said in a statement.
Drugstore.com also said it "continues solid growth towards profitability," a reiteration of its announcement on Jan. 7 that it plans to be cash-flow positive in 2003, a year earlier than previously forecast.
Indeed, despite its steep fall, shares are still expensive and trade at price-to-sales ratio of 1.5, a premium even to
While there is little worry that the company will run out of cash before it becomes profitable, "investors will continue to take a wait-and-see attitude towards this stock until it approaches operating-cash-flow break-even" in 2003, Allyson Rodgers, of Ragen MacKenzie, wrote in a report. The date of that report, the last major analyst comment on the company? Oct. 24.