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Wedbush Thinks It's Identified Pier 1 Imports' Near-Term Bottom

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Wedbush Thinks It's Identified Pier 1 Imports' Near-Term Bottom

The recent business update for the third-quarter from Pier 1 Imports Inc (NYSE: PIR) suggests that the “second quarter may have marked a near-term bottom,” as the company's third quarter traffic and comps have benefited from marketing-led initiatives.

Pier 1's Expectations

Pier 1 now expects third-quarter results at the top end of its guidance range for comps, net sales, merchandise margin and EPS. In late September, the company guided adjusted EPS of $0.09 to $0.15, comp decline of 3 percent to 1 percent, net sales drop of 4 percent to 2 percent, merchandise margin of about 57 percent to 58 percent of sales.

The company’s sales are benefiting from easier comparison, increased marketing spending and less drag from weak categories, while margins get a boost from supply chain efficiencies, merchandising and balanced promotions.

Sidelined Wedbush

However, Wedbush remains on the sidelines, as it believes the company is not out the woods, given strong competition, soft category demand and a further shift of category sales to online during the key holiday season.

“These factors, combined with a management team in transition and now higher expectations add risk to the outlook, leaving us NEUTRAL on PIR,” analyst Seth Basham wrote in a note.

Estimates Raised

As such, Basham raised his third-quarter EPS estimate to $0.14 from $0.10 versus consensus estimate of $0.11. The analyst also increased his revenue view to $468 million from $465 million versus Street view of $464 million.

Basham also upped his full-year EPS view to $0.28 from $0.25 and revenue forecast to $1.813 billion from $1.810 billion. Consensus estimates call for earnings of $0.24 a share on revenue of $1.808 billion.

Basham has a price target of $4 on the shares, which closed Monday’s trading at $5.27. In the pre-market hours Tuesday, the stock is up 4.55 percent to $5.51, and at last check, the stock was up 7.4 percent at $5.66.

Latest Ratings for PIR

DateFirmActionFromTo
Oct 2018MaintainsNeutralNeutral
Sep 2018TerminatesUnderperformUnderperform
Sep 2018MaintainsSellSell

View More Analyst Ratings for PIR
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings News Guidance Price Target Previews Reiteration Analyst Ratings Best of Benzinga

 

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