Battered EToys Stock Gets ‘Buy’ Rating on Weakness

EToys Inc.’s beleaguered shareholders got an early Christmas present Wednesday when a Robertson Stephens analyst said the stock had been slashed so hard it represents a juicy value.

“Current share price weakness, coupled with the company’s attractive growth opportunities in new categories and international markets, represents a compelling risk/reward for what we continue to believe is a franchise e-tailer,” said Lauren Cooks Levitan, who upgraded the Santa Monica company’s stock to “buy” from “long-term attractive.”

The shares (ticker symbol: ETYS) jumped $2.50 to $17 on Nasdaq. Despite the bounce, they are down 35% this year and 80% off their Oct. 11 peak of $86.

Levitan said she was “surprised” by the stock’s weakness, considering that the company’s recent quarterly earnings report showed heavy losses but also a surge in sales to $107 million. “We view this stock as a core Internet holding,” she said.

Apparently, few on Wall Street share that view. Of the 11 brokerages covering the stock, four rate it a “buy” and seven rate it a “hold” (their way of saying, “I wouldn’t buy it, but hey, it’s your money”).