Zacks Investment Research upgraded shares of Hhgregg, Inc. (HGG) from UNDERPERFORM to NEUTRAL on June 27, 2012, with a target price of $11.00.
We are upgrading our recommendation on hhgregg to Neutral from Underperform on better than expected fourth quarter 2012 earnings and top-line growth. hhgregg's earnings of $0.39 per share, exceeded the Zacks Consensus Estimate by $0.02 per share , give the growth rate of sales. Sales increased by 21% in the quarter due to the addition of 35 new stores. Increased advertising expenses are improving customer traffic and driving sales growth. However, the company has been experiencing lower margins in the video category owing to the promotional activities across all screen sizes. We also expect rising costs and pricing limitations as headwinds and thus prefer to remain on the sidelines with a Neutral rating and a target price of $11.00.
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