) to long-term buy from neutral.
Analyst Ozarslan Tangun says his upgrade is based on solid fiscal 2006 (ending January) earnings per share guidance of $1.20 to $1.25 and a strong balance sheet with over $4 in cash per share.
Tangun says fourth-quarter performance is better than his expectations, primarily due to lower selling, general, and administrative costs, lower interest expense, and fewer shares outstanding as compared to his model.
He notes the company has tough comparable sales in the first half, however, the current valuation, combined with a strong balance sheet, warrant his upgrade. He has an $18 target based on 15 times his fiscal 2006 earnings per share estimate, in line with the company's long-term growth rate.