Goldman Sachs Positive on Family Dollar (FDO) Into Q3 Results

June 25, 2012 7:52 AM EDT
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Price: $79.39 --0%

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    0 Buy, 23 Hold, 4 Sell

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    Up: 23 | Down: 34 | New: 34
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Goldman Sachs reiterated their Buy rating and $73 price target on Family Dollar Stores Inc. (NYSE: FDO) ahead of Q3 results on Thursday, June 28 before the market opens.

The firm said while near-term expectations are high, it is still under-earning with a plan.

Goldman see EPS of $1.09, 2 cents ahead of the consensus and 4 cents ahead of the midpoint of management's guidance. "Our confidence stems from merchandise introductions and positive read across from peers," the analyst said.

Expectations are high, with shares up 21% since Q2 results and trading at a multiple of 18.4X NTM EPS vs. the three-year average of 14.5X. The market is demanding a 'beat and raise,' they said. That said, Goldman believes the company has square footage and margin expansion opportunity and can boost operating margin to match peers in the double-digits. Management has outlined a plan to close this gap and they expect them to elucidate on these strategies at the July 18 analyst day.

For an analyst ratings summary and ratings history on Family Dollar Stores Inc. click here. For more ratings news on Family Dollar Stores Inc. click here.

Shares of Family Dollar Stores Inc. closed at $70.43 yesterday.

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