Bank Of America Previews CASY's F4Q11

Bank of America maintains its Neutral rating and its $43 price target on Casey's General Stores

in advance of the company's release of F4Q11 numbers. According to Bank of America, “CASY is expected to report F4Q11 after the market closes on Monday, June 13th. We forecast F4Q11E EPS of $0.52 (vs. Cons of $0.50) and expect that strength in gas margins (given “above 13.5c” guidance) could be offset by merchandise margin & expense pressure. We expect F4Q11 cost pressures to stem from: (1) higher y/y commodity costs such as cheese, wheat & coffee; (2) recent (F3Q11) pricing reductions in the cigarette category; (3) ongoing trade down to lower gross margin items; (4) higher credit card fees (estimated +60% y/y dcue to higher gas prices & an unfavorable adjustment from Q4 last yr); (5) higher transportation expenses (Casey's self-distributes); & (6) additional store remodel & labor expenses given a significant acceleration of the company's major store remodel program (we estimate ~80 major remodels completed in F4Q11).” CASY closed yesterday at $40.95.