NEW YORK (
shares are climbing more than 11% today after analyst Neely Tamminga of Piper Jaffray initiated coverage on the interactive media and home shopping company with a buy rating and an $8 price target.
Tamminga believes ShopNBC will return to positive earnings before interest, taxes, depreciation, and amortization in 2012 and will achieve net income in 2013.
The home shopping network has been gaining since November when it announced it was extending its license agreement with
NBC Universal for use of the ShopNBC brand to May 2012. ValueVision's 24-hour ShopNBC television network is broadcast to 77 million homes in the nation.
NBC currently owns more than 6 million shares of the company and GE is a large preferred stock holder.
The network is the third-largest TV shopping unit behind
Liberty Media Interactive's
QVC and Home Shopping Network.
Tamminga believes that growth in transactions at the company will result in more than a 15% gain in revenue over the next three years.
She said ValueVision's key margin driver will be its ability to leverage fees paid to cable and satellite operators.
"Leverage of cable and satellite distribution fees should drive EBITDA margins above 10% by 2015," Tamminga said in a Dec. 28 research note.
She predicts that ValueVision will double its sales in the next five years, and that while the company will see a loss of 8 cents per share in the fiscal year of 2012, investors can expect positive earnings of 17 cents a share in 2013.
She forecasts earnings of 95 cents per share in 2016 and said earnings could eventually exceed $1 per share "if cable and satellite fees can be lowered."
Today shares spiked more than 11% and reached a 52-week high of $5.42 in mid-day trading.
--Written by Theresa McCabe in Boston.
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