UPDATE: J.P. Morgan Reiterates on Big Lots Following 3Q EPS Miss

In a report published Friday, J.P. Morgan analyst Matthew R. Boss reiterated a Neutral rating on

, but lowered the price target from $32.00 to $28.00. In the report, J.P. Morgan noted, “BIG reported 3Q adjusted EPS of (-$0.16), below our model (-$0.09 / Street at -$0.08) with SSS down 2.5%, the worst two-year stacked performance in 5+ years, with EBIT dollars down $5.3M (vs. JPM +$1.8M) and top line worsening 4Q to date (down HSD-LDD, on our math). Glass half full, mgmt's decision to close its unprofitable Canadian operation is prudent with the US earnings base reset ~20% ($2.40- $2.55 from $3.05-$3.20) and CEO Campisi's turnaround plan yet to take hold (Spring '14 = lead times). That said, BIG's business model remains in flux, with 2013 representing the third straight year of negative SSS (-2% to -3%) with continued US EBIT dollar declines (down $74M in '13 / '12: -$45.7M / 2011: Flat) raising structural LT questions. Looking ahead, we see FY14 as a ‘transition year' with P&L constraints (reduced sq ft growth, lower margin cooler ramp, capital redeployment) compressing EPS (particularly in 1H) with our model reduced to $2.65 from our Street-low $3.00 (vs. Street at $3.24) and our price target reduced to $28 (from $32).” Big Lots closed on Thursday at$33.90.