UBS Maintains Sell Rating On Pier 1

Although Pier 1 Imports Inc PIR shares are trading higher by around 5 percent after reporting Q2 results, UBS maintained a Sell rating and $3.50 price target.

Analyst Michael Lasser cited low velocity in outdoor furniture sales and low e-commerce sales growth as key reasons for the rating. The company saw a 10 percent increase in e-commerce sales for the second consecutive quarter this year, according to the analyst.

Pier1 management claimed improved comp in August and September, but Lasser attributes this to the retailer's gift registry launch and expanded loyalty program.

"The outstanding question is will this be enough to make a sustainable difference, especially as it gets into what should be a very competitive holiday," asked Lasser. "Our view is it faces an uphill battle."

Contributing to this "uphill battle" will be high marketing expenses and a "complicated" real estate situation, according to the analyst.