) reported 90 cents, vs. 70 cents, second-quarter earnings per share. Citigroup downgraded the stock to hold from buy.
Analyst Bill Sims says the stock's valuation is full in context of his expectation for decelerating comp-store sales. He believes comps will likely decelerate back to the mid-single-digit range by the fourth quarter, making SG&A leverage and EPS upside opportunities more challenging; he thinks conservatism is widely discounted by investors.
Sims admits the downgrade may be early as fundamentals are still robust and management's third-quarter guidance is likely conservative.
He raised his 2005 EPS estimate to $3.23 from $3.14, 2006's to $4.05 from $3.84, and 2007's to $4.90 from $4.70. He also raised his price target to $75 from $70.