Greenfield Online, Inc. (SRVY) reported a weak 2008 first quarter, with revenues and EPS lagging our estimates. The company's new B2B initiative, along with its growth in Europe, should help boost revenues going forward. Our confidence is bolstered by the fact that the company will continue to increase spending for the roll-out of higher-margined comparison shopping business in the USA.
We have maintained our revenue and EPS estimates for remainder of 2008 and 2009, and believe that the company will also continue to invest in its existing businesses. Our projection calls for 16% and 18% revenue growth rates in FY08 and FY09 over the respective prior years. We maintain our Hold rating for SRVY and have fixed our target price at $11.50, which is 23.9x our 2008 EPS estimate of $0.48.
Market researchers worldwide are expecting their companies' use of online data providers and online access panels to increase in the next twelve months. We revised our 2008 revenue estimate to $150 million, from our previous $152 million estimate, and we have reduced our earnings per share estimate to $0.48 per share, from our previous $0.56 estimate. This is because of break-even earnings in the first quarter compared to our expectation of $0.10, the end of the year guided gross margin of 75%-76% for 2008 and effective tax rate of 25%-27% for 2008.
Currently, Greenfield Online is trading at 23.1x our 2008 EPS estimate of $0.48, and 15.2x our 2009 EPS estimate of $0.73. The company continues to remain highly regarded among users of market research data and we are encouraged by continued customer satisfaction rating in the high 90s in terms of percentages, however we remain concerned about the company's ability to return to expected growth in the future quarters.
Udayan Mukherjee contributed to this report.
Read the full analyst report on SRVY.
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