Shares of newly public e-commerce technology company ChannelAdvisor, which had fallen for five straight days, received a boost on Monday after several analysts initiating coverage of the company rated it a "buy" or its equivalent.
The stock closed Monday at $15.83, up 38 cents or 2.5 percent. The Morrisville company went public last month at $14 per share and rose as high as $18.69 on the second day of trading.
Raymond James analyst Terry Tillman rated ChannelAdvisor’s stock as "outperform," giving the thumbs up to the company’s plans to expand its sales force to boost its long-term revenue.
"We recommend buying the stock and believe the company’s more aggressive approach to investing for growth, while leading to significant losses in the medium term, positions the company for growth acceleration," Tillman wrote.
Analysts from Needham & Co., Pacific Crest Securities, and Stifel Nicolaus & Co. also issued reports that were upbeat about the prospects for the company’s stock. All four investment banks played a role in the company’s initial public offering last month in which it sold $5.75 million shares at $14 each.
Nearly 2,000 businesses use ChannelAdvisor’s software to integrate and manage their online sales across a multitude of sales channels, including marketplaces such as Amazon and eBay and comparison shopping sites such as Nextag. Companies also use its software to automatically advertise products on search engines such as Google and Yahoo and to promote products on Facebook.
"Our research suggests the company is the revenue leader in its chosen digital commerce niche," Tillman wrote.
The company’s sales force rose from 128 at the end of 2010 to 216 as of March 31, and Tillman expects the company will "continue to aggressively hire sales headcount in order to drive top line growth. Another important focus will be account management and inside sales teams focused on more aggressively growing revenue within existing customer accounts."
Tillman estimates that ChannelAdvisor’s annual revenue, which totaled nearly $53.6 million last year, will rise 20 percent to $64.4 million this year and will ramp up to $81.5 million in 2014 and $102 million in 2015.
Although the company is expected to continue to lose money, the losses "are more than offset by the prospect of accelerating growth in 2014 and 2015" and the opportunity for the company to extend its lead in the marketplace, he wrote.
Tillman’s 12-month target price for the stock is $20. ChannelAdvisor had 432 employees at the end of March.