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Wells Fargo Raises Price Valuation Range on Family Dollar (FDO) Following Quarterly Results

September 29, 2011 10:29 AM EDT
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Price: $79.39 --0%

Rating Summary:
    0 Buy, 19 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Wells Fargo is reaffirming its Market Perform rating on shares of Family Dollar Stores Inc. (NYSE: FDO) while raising its valuation range from $47-52 to $49-55.

The company released its Q4 results ahead of expectations with the upside being largely attributed to strong expense control. The firm notes that FDO will need more than cutting and controlling costs to reach its 2012 growth plan.

The firm reported that current gross margin levels leaves them concerned about market trends and in which way they're moving. Wells Fargo sees Family Dollar tapping into its credit facility to conduct its repurchase of shares and open the 450 to 500 new stores it plans to.

Wells Fargo is forecasting EPS of $0.69 for Q1 and is raising its 2012 estimate from $3.58 to $3.64.

An analyst at Wells Fargo comments, "We are bullish on the dollar store sector in general which will likely take additional share from the drug store, convenience, and grocery channels. In our view, however, this opportunity is already well understood by the Street and reflected in FDO's current stock price. We believe the company will need to deliver very strong financial results to drive stock outperformance from here."

For more ratings news on Family Dollar Stores Inc. click here and for the rating history of Family Dollar Stores Inc. click here.

Shares of Family Dollar Stores Inc. closed at $53.31 yesterday.


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