UPDATE: JP Morgan Downgrades Big Lots to Underweight on Micro Issues

JP Morgan reduced its ration on Big Lots

from Neutral to Underweight and lowered its price target from $41 to $34. JP Morgan commented, "Structurally, BIG's EPS profile has changed with EBIT $ falling in 2011 and a similar scenario likely this year (share buybacks representing more than 100% of EPS growth). At a micro level, the consumables category remains the company's Achilles heel (lack of top-line consistency) – an area undergoing change, but tougher compares (+520bps in 2H) and stronger competition (private label pricing, CA expansion) likely extends the turnaround. Looking ahead, we see downside to 2H12 and 2013 estimates given continued top-line (consumables competition; discretionary exposure) and margin (mix shift) concerns." Big Lots closed at $41.31 on Thursday.