E-commerce solution provider PFSW stock has bucked its downward trajectory over the last week but is the rally sustainable?
Shares of e-commerce fulfillment and customer service provider PFSweb (NASDAQ:PFSW) jumped 7.9% in trading on Wednesday after some form 4’s filed with the Securities and Exchange Commission revealed two company insiders purchased stock Tuesday on market in the trading window following results.
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It is always a good sign when company insiders have some skin in the game.
Regardless of the rally that has lifted PFSW stock 13.4% this week, the shares are still down more than 60% over the 12 months. It is not a true representation of the stock's performance as the company paid out a $4.50 dividend in December after selling off one LiveArea segment of the business for $250 million.
When fixing that dividend back into the price, shares are actually down around 21%.
The transactions were initially spotted on Fintel’s Insider Trading Tracker later on Tuesday evening.
Second Catalyst
One of the insider buyers was CEO Michael Willoughby who purchased 50,000 shares at $4.22 each for a total value of $211 thousand.
Willoughby nows owns a total of 623,014 shares after the latest acquisition equating to around 2.75% of the total float.
The second buyer was board member Benjamin Rosenzweig who acquired 2,250 shares at $4.20 each. He owns a total of 22,118 shares after the transaction. Most of Rosenzweig's PFSW stock transactions over the past three years have been deferred stock award lots, so this straight-out purchase could be seen as a vote of confidence from the director. He has been on the company's board for almost a decade.
The insider buying activity has been the second catalyst for the stock this week after PFSweb announced the authorization of a new share buyback program on Monday. In the filing, PFSW announced that up to 1 million shares would be purchased on the market over a two year period.
These measures and actions have been the latest effort by management to boost investor sentiment after recent fourth quarter and full year results failed to excite the market.
PFS grew revenues by 6% in 2022 to $295.1 million and adjusted EBITDA by 3% to $23.2 million.
When breaking down the sales into segments, service fees were broadly flat over the year, product revenue fell sharply and pass-through revenue grew by almost 50% and supported the group.
On the bottomline, net losses from continued operations widened to $20.2 million from $13.6 million in 2021 as the cost of doing business and interest expenses rose.
On the outlook for 2023, PFS is guiding 5% to 10% growth in annual service fee sales with an adjusted EBITDA margin of 8% to 10%.
Strategy Alternative
The company said that it would also continue to work with its financial advisor Raymond James on a review of a full range of strategic alternatives for the business.
Craig Hallum Capital analyst George Sutton was surprised positively by the resiliency of PFSweb’s niche in the luxury brand fulfilment sector.
That said, Sutton is forecasting a slow start to the year for PFSW due to the timing of client implementations and FX headwinds but maintains his ‘buy’ call on the stock and bullish $11 price target.
Research from the Fintel platform recognised PFS could be a short squeeze candidate, based on a Fintel squeeze score of 81.61 and 11.88% of the float is currently shorted with 2.60 days to cover.
Although the borrow fee rates remain low, we will be keeping an eye on this measure for an uptick that might suggest a squeeze could break out.
From an institutional accumulation perspective, PFSweb screens quite negatively relative to other stocks in the market, evident in a bearish Fintel Quant Fund Sentiment Score of 13.84.
This quantitative scoring measure ranks companies based on the highest levels of institutional buying activity. PSFW screens in the bottom 3% out of 35,898 screened global securities.
Article by Ben Ward, Fintel
