Multiple Downgrades Challenge Bankrate Ahead of Earnings (RATE)

Bankrate Inc. (NASDAQ: RATE) is set to report earnings after the close today.  What in interesting is that we have seen four downgrades in the recent trading days based on valuation, and this stock just put in another yearly high last Friday.

On January 31, Credit Suisse downgraded the stock to Neutral from Outperform.  Yesterday Citigroup downgraded it to Hold from Buy, and Merriman Curhan Ford downgraded it to Neutral from Buy.  Then this morning we saw a downgrade out of Jefferies to Hold from Buy.  Most of these downgrades are based upon valuation and stock performance rather than new competition.

We’d caution against using any consensus estimates as complete gospel right now because of all teh last minute changes, but First Call sows estimates now at $0.39 EPS on $26.83 million revenues.  On last look, next quarter estimates were $0.45 EPS o $33.36 million revenues and fiscal Dec-2008 estimates were $1.96 EPS on $142.75 million.

Regardless of these downgrades upon valuation, the stock is only down 1.5% today and only down about 2% from its all-time highs.  We do not have the end of January short interest yet, but the short interest has been growing as the stock has risen and the mid-January short interest was listed as 5.32 million shares.

With this stock being right up against its highs during a period of a crummy stock market, today’s post-report trading is going to probably be one of the more exciting stocks to watch.

Jon C. Ogg
February 5, 2008