After a pullback in shares that followed Floor & Decor Holdings Inc FND's first-quarter print and a meeting with CFO Trevor Lang, Piper Jaffray is upwardly revising its stance on the retailer.
The Analyst
Analyst Peter Keith upgraded shares of Floor & Décor from Neutral to Overweight and increased the price target from $51 to $58.
The Thesis
Floor & Décor shares are attractive relative to other growth retailers given the company's superior comp and earnings per share growth, Keith said in a Wednesday note.
The analyst highlighted the following takeaways from his meeting with CFO Lang:
- Increased confidence in long-term competitive strengths and positioning.
- Less drag from lapping hurricane comparisons beginning in the fourth quarter.
- A likely rebound in gross margins in 2019.
- Healthy and sustainable comp growth in 2019 and beyond courtesy of the ramping of key operating initiatives in 2019.
The retailer is comfortable with the outlook for a moderation in hard surface flooring industry growth from 9 percent over the past five years to mid-single-digit growth for the next three to four years, Keith said.
The following initiatives should support continued strong comp growth in 2019, according to Piper Jaffray:
- A pro loyalty program set for a launch in the second half of 2018.
- The ramping of a new national marketing effort.
- Maturation curve benefits that should result in the bottoming of comps in Boston, Seattle and Long Island in 2019.
The Price Action
Floor & Décor shares were rallying 6.32 percent to $51.88 at the time of publication Wednesday afternoon.
Related Links:
Lightning Round: Jim Cramer Advises His Viewers On Chegg, Floor & Decor, Regeneron, And More
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.