American Technology initiates coverage on Blue Nile (NILE) with sell.
Analyst Mark Mahaney says he believes for investors with a 12-month outlook Nile's risks outweigh rewards. He says key factors behind the sell rating are significant current and potential competition from online and offline companies, markedly decelerating growth rates, and margin pressure.
He notes at the current price, he believes Nile's multiples are too high. He says international sales account for less than 10% of Nile's revenue. Given what he views as significantly faster growing international markets, he believes Nile's limited international exposure is a negative. Mahaney sees 63 cents 2004 EPS and 90 cents 2005 EPS. He has a $28 target.