Needham & Company Maintains a 'Strong Buy' on Destination Maternity (DEST); Weak June Sales Lead Us To Trim Numbers, But We Continue to See Upside

Needham & Company maintains a 'Strong Buy' on Destination Maternity (NASDAQ: DEST), PT lowered by $1 to $29.

Needham analyst says, "DEST announced that its June sales were better than May, but below management’s expectations, as well as ours. Samestore
sales (SSS) declined about 1%, better than the 5% decline in May (adjusted for the calendar-days shift), but lower than our forecast of low single digits. As a result of the weakness in May and June, the company said its earnings for 3Q (ended June 30) would be at the low end (and possibly below the low end) of their guidance range of $0.72 to $0.83, much lower than our $0.84 estimate, which compares to $0.67 last year. We have lowered our EPS estimates for FY2011, as well as for 2012 and 2013 to reflect a more conservative sales forecast. We continue to believe the stock will trade much higher in a year, but have trimmed our price target."

"We now see 2011 GAAP EPS coming in at $1.90, down from our prior estimate of $2.10, vs. $1.33 last year. We have lowered our 2012 EPS estimate to $2.10 from $2.25, and 2013 to $2.35 from $2.50."

For more ratings news on Destination Maternity click here and for the rating history of Destination Maternity click here.

Shares of Destination Maternity closed at $20.26 yesterday.

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