UPDATE: Citigroup Reiterates Neutral Rating, Raises PT on Tile Shop Holdings on Further Detail Following Management Meetings

In a report published Tuesday, Citigroup analyst Kate McShane reiterated a Neutral rating on Tile Shop Holdings TTS, and raised the price target from $14.75 to $18.00. In the report, Citigroup noted, “We had the opportunity to meet with mgt in Boston including Rob Rucker, CEO, Chris Homeister, COO and Tim Clayton, CFO. Our restriction was lifted on 12/1. Client questions centered around the recent report which alleges issues with inventory, gross margins and employee relationships with an exporter company. TTS set up an export entity after an agency they had worked with produced false invoices. The co set up the new entity (~Beijing Pingxiu) under CEO Robert Rucker's nephew's name who they believed was trustworthy and not an employee of the firm. The nephew ran the business until Nov 2011 when Rucker's brother-in-law took over the reins as the business started to grow significantly. However, the company did not know of this change in ownership until Thu 11/14/13. Although the news does not impact the co's financials, mgt noted that they would have disclosed the news if they had known and is currently investigating how it came to be.” Tile Shop Holdings closed on Monday at $15.84.