Internet Video

EBay Deal Should Boost ValueVision

10/27/2006 8:00 PM Eastern

Jefferies & Co. media analyst Robert Routh maintained his “buy” rating and $15.50-per-share 12-month price target on ValueVision Media after the cable shopping channel announced a strategic alliance with Internet bellwether eBay, allowing its ShopNBC.com Web site to enhance its auction capabilities.

According to the deal, ShopNBC.com will sell samples, products used on air, returns and discontinued products through eBay.

Routh reported that the deal could lead to more relationships between Internet retailers and their television counterparts.

“If this 'collaboration’ proves to be profitable, we think it is highly likely that we’ll see a deepening of the relationship between the internet retailers and the home shopping retailers going forward, to the benefit of both, because it makes sense,” Routh wrote. “EBay and [ValueVision] just seem to be ahead of the game as of this point.”

Routh also said in his report that the eBay deal is just the latest good news from ValueVision. In the second quarter ended Aug. 5, the company reported strong revenue growth (10%) and nearly doubled its cash flow from $2.5 million in 2005 to $4 million.

Adding to Routh’s optimism: ValueVision’s strong cash position ($75 million), that fact that it has no long-term debt and the possibility that it could sell non-core assets.

“We continue to like the [Value Vision] story and think more good things are in the works,” Routh wrote.

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