Connect with us
img

Selected News

Stamps.com shares crater after slashed forecast on fallout from Postal Service deal

A first class 44-cent US stamp is held up against a screen on April 15, 2011 in Washington,DC. The US post office had egg on its face Friday after realizing that a stamp showing the Statue of Liberty in close up was not taken in New York

BUSINESS NEWS

Stamps.com shares crater after slashed forecast on fallout from Postal Service deal

[ad_1]

Eva Hambach | AFP | Getty Images

A first class 44-cent US stamp is held up against a screen on April 15, 2011 in Washington,DC. The US post office had egg on its face Friday after realizing that a stamp showing the Statue of Liberty in close up was not taken in New York’s harbor, but Las Vegas.

Stamps.com stock dropped 47% in premarket trading after the company slashed its 2019 earnings forecast, as well as projected further declines in 2020 and 2021.

The postage company announced on its first quarter conference call that it expects to take a hit due to uncertain contract changes that its partner companies have with the United States Postal Service. The hit comes after Stamps.com said in the previous quarter that it will no longer partner with USPS.

Shares of Stamps.com had already fallen 46.4% this year as of Wednesday’s close of $83.39 a share. The stock’s market value was $1.45 billion on Wednesday.

“We have very recently become aware that the USPS is currently renegotiating the negotiated service agreements of several of our reseller partners,” Stamps.com CFO Jeff Carberry told shareholders on the call. “While these are ongoing negotiations with uncertain outcomes and we have limited visibility given that the negotiations are being conducted between the USPS and our reseller integration partners, we believe it is reasonably possible that the margins associated and earned by the resellers as a result of these negotiations will begin to decrease around the second half of 2019.”

Stamps.com issued a 2019 earnings guidance within a range of $3.35 a share to $4.85 a share, a 35% cut on the bottom end of the range from its previous guidance.

“The STMP management team was completely caught off guard by the USPS’ proposed changes to the reseller program,” B. Riley analyst Zach Cummins said in a note to investors. “Although reseller agreements have been a source of scrutiny in recent years, it was surprising to see the USPS take such action given that reseller agreements have been a key contributor to the USPS’ shipping volume growth over the past 10 years.”

Wall Street expected Stamps.com to earn $5.42 a share in 2019, according to analysts surveyed by FactSet.

“Although we do not provide guidance beyond 2019, the current U.S. proposals, as we currently understand them, could also result in additional meaningful reductions in margins earned by resellers in 2020 and 2021,” Carberry added. “This in turn could have a significant impact on our revenues and earnings in those years.”

[ad_2]

Source link

Continue Reading
You may also like...
Click to comment

Leave a Reply

Your email address will not be published.

More in BUSINESS NEWS

To Top
error: Content is protected !!