Angie's List (ANGI) Plunges: Wall Street's Take

NEW YORK (TheStreet) -- Angie's List (ANGI) was plummeting on Thursday after missing bottom-line estimates over its fourth quarter.

In the three months to December, the home improvement online directory reported net income of 5 cents a share, 8 cents lower than Thomson Reuters estimates.

For the current quarter, management anticipates sales between $71.5 million and $72.5 million, lower than consensus of $74.14 million.

Here's what Wall Street analysts have to say:

Canaccord Genuity reiterated its "hold" rating but lowered its price target to $16 from $22. Analysts Michael Graham and Maria Ripps remain bullish on service provider revenue growth which grew 57%, though are cautious after sales and guidance came in below their estimates.

"In general, the model showed less efficiency in the quarter, and the outlook for slower margin progression implies possibly more of the same as management focuses more on growth. We continue to believe Angie's service is highly valued by Service Provider customers, and believe that cohort analysis suggests a business that is far more stable than implied by the stock. Over the coming quarters, we believe new pricing tiers for members could help stabilize the model," the analysts wrote in the report.

Canaccord estimates per-share earnings of 1 cent for fiscal 2014 and 72 cents for fiscal 2015.

Pacific Crest Securities kept the stock at "sector perform," noting that while initial 2014 outlook is disappointing, expectations going forward will be realistic. Analysts Evan Wilson and Bryan Lang point to weaker membership acquisition than expected as one of the reasons they remain cautious.

"It looks like Angie's List is closer to full penetration of its true TAM than the consensus currently assumes as memberships grew slower than it liked, marketing was less effective than expected and growth in new service providers has stalled. The hope was that after it gained critical mass, its users would become its best advertisers and it could in turn lower its marketing expenses, but this now seems more unlikely," wrote Wilson and Lang in the report.

Deutsche Bank reaffirmed a "hold" rating but cut its target price to $13 from $16.

"4Q results leave us more confused as to what's going on at Angie's List and how the company solves its challenges," analysts wrote in the note. "While the company pointed to changes in the user funnel, either something is not working in the existing funnel or marketing test execution is poor, or both. Neither is encouraging."

Oppenheimer, however, reiterated the stock as "outperform" but cut its price target to $26 from $31 and revised full-year estimates.

"We are lowering 2014E and 2015E revenue by 3% and 7%, as management has not yet deployed its new member programs, which will offer tiered pricing and memberships combined with e-commerce offers," wrote analysts Jason Helfstein and Jed Kelly in the research note.

"However, even at these revised levels, ANGI shares are trading at a very modest 2x 2015E sales, an 80% discount to its high-growth peers."

Also See: Angie's List (ANGI) Reports Fourth-Quarter, Full-Year Results

Also See: Why Angie's List is Rallying on Friday

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