NEW YORK—A JPMorgan analyst upgraded Big Lots Inc. on Monday, saying the closeout retailer's shares are no longer overpriced and sales at its older stores have stabilized.
Charles Grom raised Big Lots to "Overweight" from "Neutral" in a research note. He also changed his 2008 outlook to $1.81 per share from $1.78. Analysts polled by Thomson Financial expect earnings of $1.74 per share, on average.
Grom noted that shares of the Columbus, Ohio, company are down roughly 16 percent since he started coverage last June, even as earnings have beat Wall Street estimates for at least eight consecutive quarters, making the stock attractively priced.
In addition, same-store sales -- or sales at stores open at least a year -- have stabilized, Grom said. Same-store sales are an important metric in retail because they measure performance at existing stores rather than newly opened ones.
The analyst added that Big Lots is also well positioned to take advantage of the likely economic recession as other retailers enter bankruptcy and consumers look for stores with lower prices.
