Piper Jaffray Reiterates Underweight Rating on Family Dollar (FDO)

Piper Jaffray is out with a research report this morning, where it reiterates its Underweight rating on Family Dollar Stores Inc. FDO; it has a $37.00 price target on the stock, up from $34.00. The PJ analysts cited FDO's recent earnings report, which missed the consensus estimate. Additionally, the initial F11 EPS guidance of $2.95-$3.15 appears aggressive in their view. Management stated they expect DD comp growth from the remodeled stores. The store remodels are expected to cost from $100k-$130K per store and 100 have been completed thus far. In terms of comp, Management did state Sept comp was running within the 5-7% guidance range for Q1. As for valuation, the analysts remarked, “We reiterate our UW rating and are increasing our PT to $37 PT based on the same 6x F11 EBITDA ($782m), net cash of $253M and shares outstanding of 133.2M.”