1-800-Flowers Analyst Sees Stock Struggling to Top Spring Rally

(Bloomberg) -- Coronavirus lockdowns were a boon to 1-800-Flowers.com as local florists and gift shops in the U.S. shuttered their doors, leading shares in the e-commerce company to a record high in mid-June. But don't expect that momentum to continue if the recession lingers, said one analyst who has turned bearish on the stock.

D.A. Davidson's Linda Bolton Weiser said that as e-commerce momentum cools, 1-800-Flowers' performance could weaken like it did in the 2008-2009 recession, where revenue fell around 10%-12%.

Flowers are “one of the last things people buy in a recession,” Weiser said in an interview this week.

The combination of stay-at-home orders along with heightened demand on Easter and Mother's Day helped the stock more than double from a 52-week low of $11.15 in mid-March. Yet floral gifting tends to decline after those two major holidays, Bolton Weiser said. She cut her rating on 1-800-Flowers to the equivalent of a sell from neutral on June 2, and now projects shares will slip to $18 over the next 12 months.

Five other Wall Street analysts covering the gift-giving platform were not as downbeat: All have kept their buy ratings on the owner of Harry & David and Shari's Berries in recent months, banking on e-commerce growth trends continuing this year.

The company has no significant competitors and the lack of in-person events has driven sales for flowers sent for graduation, funerals and birthdays, Benchmark analyst Daniel L. Kurnos said in an interview Wednesday. Shares rose 4.1% today to close at $20.85.

“Flexible delivery windows, lack of travel and a general uptick in everyday gifting all conspired to drive revenue growth” in the consumer floral segment, Kurnos said in a June 18 note. He predicts the June quarter will see revenue growth “likely somewhere near 40%.”

1-800-Flowers on June 18 lifted its revenue growth view to 16%-18% from 8%-9% for the fiscal year that ended Tuesday, while also cautioning that the coming year likely won't replicate the fourth quarter's “record top and bottom-line performance.” After the announcement, the stock soared as high as $26.81 before closing lower by almost 4%.

The fourth quarter will be very hard to beat, D.A. Davidson's Bolton Weiser said in a June 19 note, adding that revenue could plunge by more than 30% in the final quarter of fiscal 2021 “if business returns to normalized levels.” She also wrote that even if the recession turns out to be less severe than anticipated, “wholesale gift basket orders for the holidays are set in stone now.”

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