Zacks Investment Research upgraded shares of Big Lots, Inc. (BIG) from UNDERPERFORM to NEUTRAL on December 26, 2012, with a target price of $30.00.
We upgraded our recommendation on Big Lots to Neutral following better-than-expected third-quarter 2012 bottom-line results and an upbeat outlook. But we remain cautious on the stock given its top-line performance that missed Zacks' expectation and contraction in margin. The company posted quarterly loss of $0.10 per share that fared better than the Zacks Consensus Estimate of a loss of $0.24 and the company's earlier projection of loss of $0.20 to $0.30 per share. Management now projects fiscal 2012 earnings between $2.86 and $3.05 per share, up from previously provided guidance of $2.80 to $2.95 per share. The closeout format gives the company an edge over traditional discount retailers as customers are offered merchandise assortments at very low prices. However, total revenue fell by 0.4% to $1,134.2 million and missed the Zacks Consensus Estimate of $1,139 million. Gross margin also contracted 90 basis points. Management expects the acquisition of Liquidation World to be accretive to its top line in the coming years.
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