BWS Financial Sees Strong Times Ahead For RetailMeNot

In a report issued by BWS Financial, the firm initiated coverage on RetailMeNot Inc (NASDAQ: SALE) with a Buy rating and a $26 price target.

RetailMeNot fourth-quarter revenues of $87.4 million and EPS of $0.43, beating analyst expectations of $86.1 million and $0.32 respectfully.

Analyst Hamed Khorsand gave six reasons why the firm is bullish on RetailMeNot:

• 1. RetailMeNot has become the go-to destination for shoppers by relying on feedback from customers, taking the concept of clipping coupons to the next level.
• 2. RetailMeNot's gross margin is extremely profitable in its industry. EBIT margin is currently at 35 percent.
• 3. There is room for improvement in RetailMeNot's mobile strategy as 43 percent of the website's traffic is from wireless devices but the company only derives 25 percent of its revenue from the traffic.
• 4. Many of the fixed expenses of transitioning to mobile have already been completed, leaving room for growth.
• 5. Analysts believe that due to changes in the mobile business model, RetailMeNot has reached a discount compared to its peers.
• 6. RetailMeNot's large customer base provides leverage when negotiating with retailers.