Shares of online jewelry retailer Blue Nile Inc could rise as much as 25 percent this year if diamond price inflation slows, according to a report in Barron's weekly financial newspaper.

Blue Nile's online retail site

A jump last year in the price of demands eroded the company's cost advantage over brick-and-mortar rivals, harming profit, the report said.

The company's shares are down about 37 percent in the last 12 months.

Prices for diamonds should not rise as much in 2012 as they did in 2011, and Blue Nile should be helped by a new strategy to boost revenue by lowering prices and by international expansion, the report said.