UPDATE: Compass Point Initiates Coverage On Xoom On Slowing Growth At An Unreasonable Price

In a report published Friday, Compass Point analyst Michael Tarkan initiated coverage on Xoom Corporation (NASDAQ: XOOM) with a Sell rating and $11.00 price target.

In the report, Compass Point noted, “We are assuming coverage of Xoom Corporation (XOOM) with a Sell rating and $11 price target. Xoom is a leading international money transfer provider that focuses primarily on helping consumers send money from the U.S. to one of 31 different countries either directly online or through a mobile device. While we favor Xoom's operating model relative to the legacy money transfer agent model, increasing competition and ongoing concentration risk create uncertainty—and with shares trading at 42x our 2015 EPS estimate and 27x our 2016 estimate, versus peers at 10x-11x and 9x-10x, respectively, valuation appears rich. Simply put, meaningful growth should continue over the next several years, but the stock still looks expensive relative to the potential risks, even though shares are already down 46% year-to-date.”

Xoom closed on Thursday at $14.80.