Online furniture and home furnishings retailer Overstock.com (OSTK) announced that its board of directors have approved a common stock repurchase program of up to $100 million. Notably, the company currently does not pay any dividend on its common shares, as it intends to retain earnings to invest in future growth opportunities.
The buyback plan comes with an expiration date of December 31, 2023. According to the company, the repurchase program is “designed to return value to Overstock stockholders and help offset the dilutive impact of recent stock issuances and future employee restricted stock vesting.”
The company is expected to fund the stock repurchase program through its existing cash balance and cash generated from operations. (See Overstock stock charts on TipRanks)
The CEO of Overstock, Jonathan Johnson, said, “Today’s announcement demonstrates our confidence in our business and our ability to deliver sustainable, profitable market share growth.”
“This share repurchase program is aligned with our commitment to strategically deploy capital where we believe we can drive the greatest value for our shareholders and underscores the strength of our balance sheet,” he added.
On August 6, Needham analyst Anna Andreeva assigned a Buy rating to the stock with a price target of $150 (upside potential of 116%).
Andreeva noted, “The company is in the early innings of new buyer retention initiatives, which we expect to drive a more sticky customer base while allowing it to maintain healthy profitability.”
Also, the analyst sees favorable demand backdrop in the Home & Furnishings space, the company’s entry into Canada significantly expanding its TAM, a strong balance sheet with minimal debt and a discounted valuation as key tailwinds.
Consensus among analysts is a Strong Buy based on 4 unanimous Buys. The average Overstock price target stands at $133.25, which implies 91.8% upside potential from current levels.
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Overstock with 10.5% of investors on Tipranks increasing their exposure to the stock over the past 30 days.
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