NEW YORK (AP) — OpenTable's stock dropped Wednesday after an Oppenheimer analyst lowered his rating for the online restaurant reservation company, saying the recent rally in its stock is too much and doesn't reflect risks related to possible delays in implementing new technology or potential higher costs.
THE SPARK: Jason Helfstein of Oppenheimer & Co. cut OpenTable Inc. to "Perform" from "Outperform." He kept a $54 price target, below Tuesday's close of $54.87.
The San Francisco company's stock had gained 17 percent over the past three months, while the Standard & Poor's 500 index rose nearly 7 percent.
THE BIG PICTURE: About 26,000 restaurants use OpenTable's reservation service. Diners in the U.S. and several other countries, such as China, France, Spain and the U.K. can use OpenTable to book a table.
The company has been working on a new electronic reservation system, and said in November that it planned a pilot test of the technology by the end of 2012. OpenTable spokeswoman Tiffany Fox would not comment further on rollout plans before the company's release of financial results on Feb. 7.
THE ANALYSIS: Helfstein said that the new product would impact the second half of 2013 at the earliest, and a delay could weigh on shares.
SHARE ACTION: Shares of OpenTable Inc. fell $2.80, or 5.1 percent, to $52.07 in late afternoon trading Wednesday. The stock had peaked at $55.95, its highest point since September, 2011, last Thursday.