Wedbush Keeps a 'Neutral' Rating on Zumiez (ZUMZ); Lowers Estimates

November 20, 2009 9:50 AM EST

Wedbush maintains a 'Neutral' rating on Zumiez (Nasdaq: ZUMZ), price target $10.

Wedbush analyst says, "We believe shares of Zumiez could remain range-bound given disappointing Q4 guidance driven by indications that comps could be under pressure given the volatility in recent trends. That said, we are encouraged by continued positive comps in the footwear category, an improvement in men's apparel (~33% of sales) and the improved comp trend in the West (albeit still comping negative) at (10)%, while stores in the NE, MW, and South had a (6.5)% comp decline...Given indications of volatile sales trends, we are decreasing our Q4 EPS estimate to $0.20 from $0.25 prior and inline with management guidance of $0.18-0.22. We are reducing our F09 EPS to $0.23 from $0.26 prior vs. $0.60 LY as we continue to expect occupancy deleverage on negative comps. Applying a 0.5x EV/Sales multiple (a discount to the specialty teen average of 0.8x given limited visibility on improving topline trends) to our new F10 EPS estimate of $0.32, we drive our new 12-month price target of $10."

To see all the upgrades/downgrades on shares of ZUMZ, visit our Analyst Ratings page.

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