BTIG Reaffirms PIER 1 IMPORTS (PIR) at 'Sell'; Sees Little Catalyst from Alden Global Capital Stake

September 20, 2016 9:05 AM EDT
Get Alerts PIR Hot Sheet
Price: $4.24 -5.15%

Rating Summary:
    4 Buy, 15 Hold, 5 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 9 | New: 77
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BTIG maintains a Sell rating and $3.50 price target on PIER 1 IMPORTS (NYSE: PIR) after Alden Global Capital reported holding a 9.5 percent stake in the retailer.

Analyst Alan Rifkin commented, we do not believe this development changes the deteriorating fundamentals and intensely competitive environment that underpin our thesis.

Rifkin noted deteriorating fundamentals and uncertainty in e-commerce as key points of the firm's Sell rating:

We urge investors to focus on the fundamentals of PIR which continue to deteriorate, even as the company grows its e-commerce business significantly. We project that e-commerce will represent 20-22% of annual revenues at year-end 2016 – a significant increase considering the initiative is only about four years old. We project 2016 FY EPS of $0.09, with EBIT margin of 1.3% compared to 2012 FY EPS of $1.20 and EBIT margin of 11.5% -- when PIR 1 had no e-commerce presence. We believe that as Pier 1 has grown its e-commerce business, its once unique assortment of merchandise has now become ubiquitous as pricing transparency is easier today than ever before. We do not believe there are any strategic parties interested in acquiring PIR.

We remain concerned that e-comm revenues, now 20% of sales, is increasingly dilutive to EBIT margin. We have questioned for years the breakeven point of $200MM. With e-comm today at a run-rate of $375-400MM, there is no clear path to profitability for this channel.

For an analyst ratings summary and ratings history on PIER 1 IMPORTS click here. For more ratings news on PIER 1 IMPORTS click here.



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Alden Global Capital, BTIG

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