LoopNet Earnings Preview: Fourth Quarter 2008

LoopNet [[LOOP]] is scheduled to report their fourth quarter 2008 results after the market closes on Wednesday, February 11. Based on our analysis, we at EarningsPreview.com are expecting LOOP to report better than expected results that exceed Wall Street’s expectations.

 

Analyst Expectations

We are forecasting revenues of $21.3 million and EPS of $.12. This would represent a 9% growth in revenues from last year’s $19.6 million in the same period. The current analyst consensus calls for revenues of $21.3 million and $.11 EPS. On October 30, the company provided revenue guidance of $21.0 – 21.3 million.

 

LoopNet has continued its strong growth pattern despite the prevailing tough economic conditions. Our checks showed traffic growth remained strong in the fourth quarter for the LoopNet.com website. Management has done a superb job of guiding this company despite the current economic challenges. Since going public in the summer of 2006, the company has managed to beat analyst estimates each quarter and we believe that will be the case yet again this quarter. 

 

Expectations for 2009 are already very muted with Wall Street only expecting 2% growth. However, assuming economic conditions do not improve for the remainder of 2009 we would expect full year revenues to decline slightly. We would expect management to issue a conservative guidance projection that reflects a slight decline in revenues or at best flat revenues for the year.

 

Share Performance

LoopNet’s shares are down only 1% since the beginning of the year. Last year, the shares lost just over half their value compared to the Dow Jones index’s 34% drop.

 

Valuation

Shares are now trading at 14x consensus 2009 EPS estimates. This is below the relative valuations of their peer group. Despite the strong economic headwinds that LOOP is facing, we continue to be positive on both their business model and their relative valuation. We also note that the company has over $2 per share in cash with zero debt on their balance sheet. 

 

Recommendation: Buy with a $9 price target.

 

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