Updated from Nov. 3
Shares of upstart online retailer
zoomed up more than 21% after an upbeat analyst note and the company's third-quarter report.
The company posted a loss in the quarter after a year-ago profit. But its growth in revenue, customer base and orders grew much better than expected, said ThinkEquity analyst Ed Weller, in a research note issued Thursday. Saying that the company has "huge momentum," Weller raised his revenue estimates for 2004, 2005 and 2006 and raised his price target on the stock to $16 from $12.
"Because of these strong results -- and in recognition of having been still too conservative in anticipating the market's willingness to value the company's growth and potential returns -- we have raised our 12-month target price," Weller said, deeming the stock a buy.
Investors seemed to echo that sentiment. In recent trading, eCost's stock was up $2.35, or 21.5%, to $13.30.
The online discount retailer said after the bell Wednesday that it lost $892,000, or 6 cents a share, compared with a year-ago profit of $252,000, or 2 cents a share.
The company swung to a loss due to IPO-related expenses and noncash stock-based compensation. Excluding such items, eCost said it had break-even earnings per share in the latest quarter.
Revenue in the quarter rose 70% to $43.4 million.
The company said sales growth continued to accelerate while eCost continued to lower its cost to acquire new customers. Gross profit per order continued to exceed new customer acquisition costs. eCost also maintained its focus on launching new product categories and expanding the depth of its product selection, the company said.