Needham & Company Upgrades Big 5 Sporting Goods (BGFV) to Strong Buy on Strong Q3, Outlook
Needham & Company upgraded Big 5 Sporting Goods (NASDAQ: BGFV) from Buy to Strong Buy with a price target of $15.00 (from $13.00) following strong Q3 results and guidance.
The firm comments: "BGFV announced strong 3Q sales and EPS that exceeded guidance. Sales were $251.8mm versus $234.7mm during the same period one year ago and were strong across all major categories and geographies. SSS rose 5.2%, well above our estimate of 2.9%, thanks in part to a shift in July 4 the holiday spending from 2Q into 3Q. GM increased 50 bps YoY to 33.3% of sales, with 25 bps of the improvement coming from increased merchandise margins. EPS were $0.38, including store closing costs of $0.01, which was above prior guidance of $0.28-$0.34. Management credited ongoing merchandising and marketing initiatives for the strong quarter and highlighted the continued tailwinds from the company’s investment in business analytics. The company expects 4Q SSS in the mid-single-digit range with EPS of $0.13-$0.21 (4Q ’11 EPS were $0.00). We believe 3Q is a clear example of the leverage in the BGFV model; despite high gasoline prices in California and an economically sensitive customer base, BGFV outperformed expectations. We have raised our 2012 EPS estimates from $0.65 to $0.72, raised 2013 from $0.90 to $1.00, and raised 2014 from $1.15 to $1.30. We have raised our price target from $13 to $15, and our rating from Buy to Strong Buy.
For an analyst ratings summary and ratings history on Big 5 Sporting Goods click here. For more ratings news on Big 5 Sporting Goods click here.
Shares of Big 5 Sporting Goods closed at $8.92 yesterday, with a 52 week range of $6.12-$11.59.
The firm comments: "BGFV announced strong 3Q sales and EPS that exceeded guidance. Sales were $251.8mm versus $234.7mm during the same period one year ago and were strong across all major categories and geographies. SSS rose 5.2%, well above our estimate of 2.9%, thanks in part to a shift in July 4 the holiday spending from 2Q into 3Q. GM increased 50 bps YoY to 33.3% of sales, with 25 bps of the improvement coming from increased merchandise margins. EPS were $0.38, including store closing costs of $0.01, which was above prior guidance of $0.28-$0.34. Management credited ongoing merchandising and marketing initiatives for the strong quarter and highlighted the continued tailwinds from the company’s investment in business analytics. The company expects 4Q SSS in the mid-single-digit range with EPS of $0.13-$0.21 (4Q ’11 EPS were $0.00). We believe 3Q is a clear example of the leverage in the BGFV model; despite high gasoline prices in California and an economically sensitive customer base, BGFV outperformed expectations. We have raised our 2012 EPS estimates from $0.65 to $0.72, raised 2013 from $0.90 to $1.00, and raised 2014 from $1.15 to $1.30. We have raised our price target from $13 to $15, and our rating from Buy to Strong Buy.
For an analyst ratings summary and ratings history on Big 5 Sporting Goods click here. For more ratings news on Big 5 Sporting Goods click here.
Shares of Big 5 Sporting Goods closed at $8.92 yesterday, with a 52 week range of $6.12-$11.59.