Family Dollar (FDO) Investors Paralyzed; Time to Step In, Thinks Analyst

July 1, 2013 2:23 PM EDT Send to a Friend
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Price: $77.95 +0.35%

Rating Summary:
    2 Buy, 21 Hold, 4 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 24 | Down: 28 | New: 14
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Deutsche Bank today maintained a Buy rating on Family Dollar Stores Inc. (NYSE: FDO) with a modified price target of $70.00 (from $71.00). Analyst Paul Trussell believes shares are at an inflection point.

"We believe we are approaching an inflection point for Family Dollar, as the margin degradation and SSS slowdown experienced in 1H13 following 3 years of strong growth has left investors paralyzed on the stock," said analyst Paul Trussell.

"FDO's business faces a number of risks, including a challenged low income consumer, impending cycling of traffic driving initiatives, a continued unfavorable mix shift, high inventory levels, and potential SNAP changes. However, many of these concerns are well known and are outweighed, in our view, by enormous opportunity to improve the top-line by returning to a MSD comp cadence and getting declining margins under control," added the analyst.

Trussell sees improvement from tobacco sales, home & apparel assortments, and private label.

For an analyst ratings summary and ratings history on Family Dollar Stores Inc. (NYSE: FDO) click here. For more ratings news on Family Dollar Stores Inc. click here.

Shares of Family Dollar Stores Inc. closed at $62.31 yesterday.


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