J.P. Morgan Neutral On Fred's, Inc. (NASDAQ)

J.P. Morgan Chase & Co. has a Neutral rating and a $12 price target on Fred's, Inc. FRED. In a note sent to investors, J.P. Morgan writes, "Fred's stock has become more intriguing recently with an impressive margin performance in 3Q, a solid balance sheet, and a number of top-line catalysts in-play. We remain cautiously on the sideline, for now, however, as 4Q has stood as the annual stumbling block for the past few years with a weak seasonal sell-through historically. We note that 4Q results have the potential to be different this time around led by the company's remodeling efforts in ~30% of the store base, improved in-stock levels, and an increased marketing/promotional presence and we will use the company's appearance at JPMorgan's SMID Cap Conference on December 3rd as an opportunity to dig deeper into ongoing initiatives and gauge quarter-to-date progress. Specifically on 3Q, EPS beat our forecast by $0.02 leading to a modest upward revision to FY10 and FY11 estimates." Shares of FRED gained 8 cents yesterday to close at $12.68.