UPDATE: The Benchmark Company Reiterates On Blucora As Recovery Will Likely Be Slow

In a report published Friday, The Benchmark Company analyst Daniel L. Kurnos reiterated a Buy rating on Blucora (NASDAQ: BCOR), but lowered the price target from $28.00 to $27.00.

In the report, The Benchmark Company noted, “Blucora (BCOR-Buy, PT from $28 to $27) reported slightly better-than-expected 2Q14 results, driven by modest upside in Tax and Search & Content.

"Shares, unfortunately, will likely suffer near-term due to an overly aggressive consensus, despite 3Q guidance matching our recently revised projections minus some incremental additional spending in Tax, as the street largely ignored the recent trends in the affiliate search space, with 2015 appearing particularly egregious. However, while IAC (IACI-Buy) and Perion (PERI-Buy) are expecting significant step-downs in 3Q search revenue, we believe 2Q represents the reset quarter for Blucora, with 3Q possibly marking a bottom for consolidated search, although O&O revenue is likely to begin growing sequentially next quarter.

"We are reserving judgment on Monoprice until 4Q, but even now assigning a discounted multiple of 9x while maintaining our industry multiples of 5x for Search and 11x for Tax, we still arrive at sum-of-the-parts valuation of $27 per share in value, or at least $24 excluding our conservative PV valuation for Blucora's $723 million in NOLs.”

Blucora closed on Thursday at $16.82.