FBR Capital Raises Estimates on Hot Topic (HOTT); October Could See Lift from New Moon and Halloween

October 8, 2009 9:20 AM EDT

FBR Capital raises estimates on Hot Topic (Nasdaq: HOTT), price target goes from $8 to $9.

FBR analyst says, "The company posted a stronger-than-expected September comp from an upside surprise at Torrid and stronger-than-expected business in the men's, women's, and music categories at Hot Topic. We believe that as the company sees a pickup in traffic from New Moon purchases and a potentially strong Halloween, shares could experience near-term positive catalysts as risk/reward may be attractive from current levels, although we believe the company's top line may remain in negative comp territory in the near term. On October 1, HOTT set all stores with a substantial offering of the New Moon product. The company has set up a New Moon main page online for fans of the hit series. The New Moon movie is slated to be in theaters on November 20, 2009 versus the Twilight movie release on November 21, 2008, and early projections are for the film to generate substantially more in box office receipts than Twilight. In the near term, sentiment may improve with the New Moon merchandise, as well as the potential for a strong Halloween."

"We are raising our current estimates on the back of the comp beat; FY09 rises from $0.34 to $0.35, and FY10 increases from $0.43 to $0.45. We are projecting a -5% consolidated comp decline for the month of October...Our FY10 EPS of $0.45."

To see more analyst ratings on HOTT Click Here.

Hot Topic, Inc., together with its subsidiaries, operates as a mall- and Web-based specialty retailer in the United States.

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