Analyst Mark Rowen says the 6-cent first-quarter loss came in a penny wider than his consensus-matching estimate. He ties the shortfall to a loss of operating leverage resulting from a decline in comp-store sales. To reflect the shortfall, he cut the $1.49 fiscal 2004 (Jan.) earnings per share estimate to $1.45. He says, while first-quarter results are nothing to write home about, they brought no surprise, as the company had preannounced in April.
Meanwhile, he thinks the second quarter may be a turning point as Borders faces easier year-over-year comparisons, and the release of the fifth Harry Potter book in June will likely stimulates sales. On that basis, Rowen reiterated his buy rating with a $22 target.