Markets & Finance

Analyst Actions: Kohl's, Urban Outfitters, Advanced Auto Parts


From Standard & Poor's Equity ResearchGOLDMAN REMOVES FROM CONVICTION LIST, MAINTAINS BUY ON KOHL'S

Goldman Sachs analyst Adrianne Shapira says she cuts her U.S. department store coverage view to neutral from attractive on heels of her commodity team's upward revision to 2008 oil forecast. She says higher gasoline prices should further crowd out consumer discretionary spending and dampen sentiment.

Given her lowered same-store sales outlook for Kohl's (KSS) and increased downside risk to EPS, she removes from Americas Conviction List; however, management has exhibited strong inventory control which has helped deliver relative margin outperformance vs. peers. For this reason, she maintains her buy rating on relative basis.

To remain consistent with her more defensive posture, she also downgrades JC Penney (JCP) and Nordstrom (JWN) to neutral from buy.

STIFEL NICOLAUS DOWNGRADES URBNURBAN OUTFITTERS TO HOLD FROM BUY

Stifel Nicolaus analyst Richard Jaffe says as Urban Outfitters' (URBN) sales and earnings comps grow progressively tougher through the balance of the year and macro economic pressure on the consumer continues, he anticipates that the rate of earnings growth will moderate.

Jaffe believes much of the good news is priced into the stock; specifically the rebound of the Urban division, continued success of the Anthropologie division and the favorable outlook for the smaller businesses (Free People, Leiffsdottir and Terrain). He believes URBN's great success has been acknowledged by the Street and is nearly fully recognized in the stock price.

GOLDMAN REITERATES BUY ON ADVANCE AUTO PARTS

Goldman Sachs analyst Matthew Fassler says Advance Auto Parts' (AAP) strong first quarter EPS beat his and consensus estimates. He notes EPS grew 20%, its strongest growth since 2005. He says the beat primarily reflected stronger total sales; notes better-than-expected gross margin.

Fassler says AAP achieved first quarter results, presumable while investing in hard parts inventory, without driving overall inventory higher. He thinks the company also invested in commercial service and reduced non-core merchandising.

The analyst believes CEO Darren Jackson is a first class finance executive. He thinks operating turnaround appears substantive.


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