Deutsche Bank Maintains Pier One at Buy on eCommerce Growth and Favorable Valuation

Deutsche Bank published a report Thursday, with analyst Adam Sindler reiterated a Buy rating on Pier 1 Imports

and maintaining its price target at $25. Sindler wrote, "PIR has already reported 4Q13 sales and narrowed its EPS guidance range from $0.59 – $0.63, to $0.59 – $0.60. We believe the focus of the call with be on the merchandise margin / gross margin spread with ecommerce becoming a bigger piece of the pie, and on guidance which we discuss below. We maintain our Buy rating on share gains through ecommerce growth and on favorable valuation." He also maintained that guidance would be key. "While sales have out-performed expectations over the past two quarters, EPS have only come in line with guidance and in this most recent quarter, were below FactSet consensus. Each time, the miss has come on expenses as investments in the growing ecommerce business have offset the sales upside. While we acknowledge that PIR should need to grow headcount – as expansion of its buying/planning/allocating teams have been core to the company's turnaround – we also believe PIR needs to tighten its guidance and potentially lay out some of these investments more directly." Pier One closed Wednesday at $22.16