The Street seems to have shed its rose-colored glasses when it comes to Martha Stewart Living Omnimedia ( MSO). 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.

"On our 2006 estimates, MSO is trading at nearly 110 times EPS (before options costs), 48 times EBITDA, and 45 times free cash flow. The stock is trading at roughly 30 times peak EPS. While the EBITDA multiple is more palatable when looking at 2007 estimates, valuation is still lofty (22 times) and is accompanied by below-average visibility," Meltz wrote. Bear Stearns seeks to do business with MSO.

The Apprentice show, a promotional vehicle for its re-emergent lifestyle czarina, has yielded only middling ratings for GE's ( GE) NBC. Meltz says that "the ratings reality for new TV initiatives has been somewhat of a buzz-kill." The Apprentice is hitting close to 7 million viewers now, while Martha, the company's syndicated daytime show, is doing reasonably well. Meltz does note, however, that "while the ratings performance for The Apprentice has been disappointing, we do think it has been a success in terms of introducing the Martha Stewart brand and MSO products to a wider audience -- as 6-7 million viewers is more than three times the subscriber base of Martha Stewart Living," the company's flagship magazine.

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