Deutsche Bank Upgrades Fred's Inc. (FRED) to Hold
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Deutsche Bank upgraded Fred's Inc. (NASDAQ: FRED) from Sell to Hold with a price target of $10 (unchanged). The upgrade was tied to valuation.
"We are upgrading shares of FRED to Hold from Sell given a reset bar (2H guidance has been dramatically lowered by mgmt.) and stock price correction (stock is down ~35% since 8/8 vs. the S&P at flat); however, we continue to believe the broader slowdown for Hepatitis C drugs (60%-70% of FRED's specialty business) and the increasingly tough competition in the discounter/dollar store space will cause a slow recovery of margin and comp performance. With the stock now trading below our EV/EBITDA multiple of 8x, we see risk/reward more balanced, and are therefore moving to the sidelines," said analyst Paul Trussell.
Shares of Fred's Inc. closed at $9.06 yesterday.
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