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NEW YORK (AP) - ZipRealty Inc. shares sank on Friday to their lowest level since the company went public last year, weighed by a bearish broker call a day after it reported earnings that missed its own estimate and forecast current-quarter results well below Wall Street's target.
Shares of ZipRealty, an online residential brokerage firm that claims to cut home buying and selling costs, slid $4.74, or 36 percent, to $8.43 in afternoon trading on the Nasdaq, where it was the biggest percentage loser. Shares of the company, went public in November last year at a price of $13 per share, earlier traded as low as $7.75.
After Thursday's market close, ZipRealty reported third-quarter net income of $2.9 million, or 11 cents per share, on revenue of $28.2 million. The company in August had forecast earnings between 12 cents to 14 cents per share.
ZipRealty also forecast fourth-quarter net income between 2 cents and 4 cents per share, on revenue from $21 million to $23 million. Wall Street's consensus view is 12 cents per share, on $28.1 million in sales, according to analysts surveyed by Thomson Financial.
The cautious outlook prompted Deutsche Bank to downgrade its opinion on the company to "Hold" from "Buy," citing a slowdown in the real estate market.
"We are lowering our rating following a lighter than expected outlook for the fourth quarter and 2006," Deutsche Bank wrote in a client note dated Nov. 3. "This is attributable to a shift in the real estate industry as inventory is rising, while buyers are on the sidelines and sellers are still demanding premium pricing."
Deutsche Bank said ZipRealty is being hurt by a sudden shift in the nation's housing market that began in September, when the number of real estate deals fell sharply as home buying offers became less frenzied, while sellers continued to expect high prices. The bank also cut its stock price target on ZipRealty to $10 from $18. |
