Cost Plus shares plunge on lowered price target
Shares of Cost Plus Inc. (Nasdaq: CPWM) reached a new 52-week low after UBS cut the company’s target price to $7 from $10.
Shares of the specialty retailer of casual home living and entertainment products slid 6.63% or $0.55, to a reach a new low of $7.74. Shares had been trading in a 52-week range of $7.86 to $14.69 before today.
“We remain concerned with prospects for Cost Plus World Market and its shares,” UBS analyst Brian Nagel wrote in a research note. “To reflect our continued lack of confidence in the ability of Cost Plus to recover successfully in an increasingly challenging macro environment we are again lowering our EPS forecasts and price target for CPWM.”
Nagel now expects fiscal year 2007 earnings to clock in at a loss of $1.10, widening from an originally forecasted loss of $0.69 and a Street forecast of a loss of $0.90. These numbers compare with a loss of $0.81 last year.
The new lower EPS forecasts are based on continued sales declines, diminishing merchandise margin in the near term and lack of expense leverage. Specifically, Nagel cites an increasingly challenging environment for home fashion retail and internal shortcomings as major difficulties that weigh on the company.
Nagel wrote, “We do not envision a positive turn at CPWM in the foreseeable future.”
