Susquehanna Upgrades Shoe Carnival (SCVL) to Positive; Near-term Opportunity & Longer Term Growth Prospects

September 24, 2009 11:06 AM EDT

Susquehanna upgrades Shoe Carnival (Nasdaq: SCVL) from Neutral to Positive. Price target $18.

Susquehanna analyst says, "Coming out of the company's 2Q conference call, back-to-school (BTS) comps were trending up ~11% as most markets had fully entered the season. Athletic trends remained strong (up double-digits), while non-athletic also performed well (up mid single-digits). More importantly, we believe comps have continued to trend positively over the past several weeks (vs. management's expectation of flat) as traffic has remained up for the quarter in response to the chain's differentiated and compelling product assortment. With guidance for a 3Q low to mid single-digit comp increase, we believe there could be sales upside in 2H given favorable comparisons in September, October, and 4Q, driven by favorable trends emerging in boots. Moreover, we expect continued tight inventory management and expense control to further enhance operating margin expansion opportunities in the second half of FY09 while a moderate sales increase could yield 20% earnings growth in FY10. After a recent run coming out of the 2Q conference call, shares have pulled back ~10% in recent days to levels we consider a more compelling entry point."

To see more analyst ratings on SCVL Click Here.

Shoe Carnival, Inc., together with its subsidiaries, operates as a footwear retailer.

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• Susquehanna International Group of Companies

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