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Ahead of the Bell: Liquidity Services' sales slow

Liquidity Services Inc.'s profit appears to be under pressure in the fiscal fourth-quarter, after the company released weak September sales results, an analyst said Monday.

The value of merchandise sold on the online retailer's sites likely fell to the low end of its earlier guidance of $230 million to $240 million for the quarter ended Sept. 30, Benchmark analyst Daniel Kurnos said in a note to clients. Kurnos forecasts gross merchandise value, or GMV, of $233 million.

The retailer of scrap and surplus goods, based in Washington, is set to report earnings for the quarter on Dec. 6.

Liquidity Services' govliquidation.com site last Thursday posted September gross sales results of $4.9 million for scrap, a 40 percent decline from the same quarter a year earlier. It sold $10.8 million in surplus goods, falling short of Benchmark's estimate of $13 million.

Falling commodity prices and calendar-specific issues contributed to the weakness, the Benchmark analyst said. Still, Kurnos said, scrap results have been consistently weak and could limit the company's profit in the fiscal fourth quarter.

Benchmark now expects the company to generate net income of 35 cents per share in the quarter ended Sept. 30. That compares with an average 37 cents per share for analysts surveyed by FactSet, with estimates ranging from 33 cents to 39 cents. The average estimate fell from 38 cents per share last week after the September sales results were released.

Liquidity Services begins trading Monday at $40.76 per share, well below the $50 to $70 range where it traded for much of the spring and summer. The stock plunged nearly 7 percent last week after the September data were released.

Kurnos maintained a "Buy" rating but cut his price target on the stock to $62 from $73.