Overstock still has many levers to pull to improve sales and profitability, including improving its mobile app experience, implementing more targeted pricing and promotions, and focusing in on its core value-conscious customer, Piper said, adding that these initiatives are "low-hanging fruit" for the company.
Overstock is also working on a blockchain project, with its t-Zero and Medici ventures units. t-Zero is a trading platform for security tokens, while Medici Ventures is a portfolio of blockchain companies partly owned by Overstock, according to Piper Sandler.
Investors shouldn't get too hung up on these initiatives, as the units represent only 2.5% of company revenue, are not profitable, and are still early-stage, according to the note. Piper Sandler views these initiatives as a "minor call option on blockchain technology," but the real focus should be on Overstock's ecommerce business unit.
Piper Sandler derived its $140 price target from an enterprise-value-to-sales multiple of 2x on estimated sales in 2021, adding that it's a reasonable valuation given Overstock's peer group is trading at 4x and its closest competitor, Wayfair, trades at a multiple of 2.3x