In February, the company reported fourth quarter revenue of $19.6 million, with EPS of 14 cents, beating the Street estimates of $19.4 million and 12 cents. And it expects first quarter revenue of $20.1 million to $20.3 million, with EPS of 11 cents to 12 cents a share, including 2 cents in stock-based compensation expense, exceeding analysts' projections of $20.2 million and 11 cents.

However, LoopNet expects full year revenue of $84 million to $86 million, less than the $90.2 million analysts had expected. Based on that projection, Cantor Fitzgerald lowered its price target on LoopNet from $29 to $18 a share. More recently, Zacks Equity Research initiated coverage of LOOP with a sell rating and a price target of $11.00 a share.

In an April 3 report, Zacks cites concerns about "a challenging near-term operating environment" that it expects to curtail share price appreciation. "Continuing macro-economic challenges will likely put stress on the commercial real estate sector," it continues, "as slower economic growth combined with tight access to debt capital may limit transaction activity. "

Analysts describe the acquisition of REApplications as a potentially beneficial long-term strategic move, even though it will have little immediate effect on earnings. Although REApplications has been profitable as a standalone business, LoopNet does not expect an immediate return on its investment. In fact, although it estimates the company will contribute $2.3 million in revenue for the remainder of 2008, the revenue will be offset by various acquisition and integration related expenses. LoopNet expects the acquisition to be dilutive to 2008 EPS in the range of a loss of $0.02 per share.

Analysts describe the acquisition as a future-focused deal. Steve Weinstein, who follows the firm for Pacific Crest Securities, says LoopNet has broad access to commercial real estate professionals, which it can leverage to market REApplications software. In addition, he explains, LoopNet could benefit by incorporating REApplications in its platform.

REApplications already serves some of the largest commercial brokerage and property valuation firms in North America, including Lee & Associates, Coldwell Banker Commercial, Grubb & Ellis | BRE, Colliers Turley Martin Tucker, Cushman & Wakefield LePage, GVA Advantis and Integra Realty Resources. If LoopNet incorporates the same software in its online platform, it could make it easier for brokers to upload listings to LoopNet than to competing online real estate sites.