From Standard & Poor's Equity Research
Stifel Nicolaus downgraded Travelzoo (TZOO) to sell from hold, noting advertising trends and stock valuation.
Analyst Scott Devitt says he has seen more advertising for sites such as Sherman's Travel and Booking Buddy in locations that were occupied exclusively by Travelzoo. He believes Travelzoo's fair value is almost 26% below current levels. The company is controlled by Ralph Bartel, who filed to sell 1 million shares in July, which should raise total float by 33%; with the company's cash balance down to $25 million, opportunity is reduced for further near-term buybacks. Devitt believes inability for Travelzoo to materially exceed expectations, plus more liquid stock, will allow Travelzoo equity to become more rationally valued.