Credit Suisse Raises Pier 1 Imports Price Target Following Q3 Print

Pier 1 Imports Inc PIR reported its third quarter results on Thursday after market close. The company earned $0.20 per share, in-line with estimates while revenue of $484.50 million fell short of the $488.78 million analysts expected.

Seth Sigman of Credit Suisse commented in a note on Friday that the company delivered a “modest win” in the third quarter after multiple weaker quarters.

Shares were maintained at Neutral with a price target raised to $15 from a previous $13.

According to Sigman, the company “made progress” on gross margins which came in 30 basis points higher than expected. The analyst also notes that the company improved its retail and online integration, with the percent of sales initiated in stores increasing to 29 percent. Also, the company appears to be moving from a net opener of stores to a net closer of stores which is “a positive development.”

“While absolute results have yet to demonstrate that the company can leverage its significant e-commerce investments (adjusted EBITDA still -17 percent year over year), we expect the stock to rise given the high level of investor interest, weak year to date stock performance, and Pier 1 Import's significant progress growing its online business,” Sigman wrote.

The analyst states that moving forward he will be monitoring the company's ability to sustain a mid-single digit or better sales growth while managing its promotional activity levels as the fourth quarter will be an “important quarter to determine if the tide is changing.”