Wedbush Securities Cuts Price Target on Family Dollar; Maintains "Neutral" Rating (FDO)

Wedbush Securities Cuts Price Target on Family Dollar; Maintains “Neutral” Rating (FDO)


Wedbush Securities reiterated its “Neutral” rating on Family Dollar Stores, Inc. (FDO) on Wednesday but lowered the discount retailer’s price target due to tough headwinds in the coming year.

The firm now see shares of FDO reaching $63, down from the previous target of $68. The new valuation is a -0.6% downside to Monday’s closing price of $63.41

A Wedbush Securities analyst commented, “Guidance for Q1 includes EPS of $0.69-$0.78, with comps up 4%-6%. When it reported fiscal Q4 results on October 3rd, the company expected tough headwinds for the year on both the gross margin and expense lines, with higher markdowns and higher shrink in Q1 exacerbating this pressure, but expected benefits from global sourcing, private brands, and pricing initiatives to offset this as the year progresses. Q1 also faces headwinds from insurance, similar to Q4, including 60 bps, or about $10 million of benefit during Q1:12 from lower insurance expense.”

Family Dollar shares were up 79 cents, or +1.25%, in premarket trading on Wednesday.

The Bottom Line
Shares of Family Dollar Stores (FDO) have a .84% dividend yield, based on Monday’s closing stock price of $63.41. The stock has technical support in the $58 price area. If the shares can firm up, we see overhead resistance around the $65-$66 price levels.

Family Dollar Stores, Inc. (FDO) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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