Big Lots's 3-Year Plan Earns a 'Hold' Rating From Cantor Fitzgerald

In a report published Thursday, analysts at Cantor Fitzgerald initiated coverage of Big Lots, Inc. BIG with a Hold rating and a price target of $44. The company appears to be in the initial stages of top and bottom line recovery. In June 2014, Big Lots announced its three-year plan to revive same store sales and operating profit. Since then, the company has been implementing various initiatives, which the analysts believe are likely to prove favorable in the longer term rather than leading to immediate payoffs. "We believe the company's recent merchandising efforts have improved SSS consistency in stores, yet Big Lots could not muster growth above 2 percent in FY:14 despite lapping easy year on year comparisons and receiving initial benefits from certain sales-driving initiatives," the analysts said. Cantor Fitzgerald expects the company's rollout of its e-commerce initiative to drive stronger same store sales momentum in FY16 and beyond, although there appear to be a great degree of overall execution risk in some of the initiatives that the company has already implemented. Although same store sales have improved, they have not grown beyond the 2 percent range yet. "We think Big Lots becomes more interesting in FY:16 given the potential sales lift we anticipate as an e-commerce platform launches. We see nothing on the horizon to slow the structural shift of consumer spending online," the analysts added.