Analyst action: HCA, Genesco, NHI

Analysts at Standard & Poor's say HCA's recent strong run deserves a two-notch boost to their corporate credit rating. Writes Shannan Murphy: "The company's business risk profile has improved, reflecting our belief that HCA's scale and diversified business mix provide a competitive advantage in negotiating contracts and managing reimbursement uncertainty over time. While we believe HCA and its peers will experience increased margin pressure due to slower reimbursement growth, we expect HCA to be better able to offset these pressures given its scale and business diversity." Shares of Nashville-based HCA (Ticker: HCA) are up about 5 percent over the past three months.

Mark Montagna at Avondale Partners has trimmed his EPS forecast for Genesco's upcoming fiscal year to $5.50 per share from $5.61. The retailer, he said, is struggling to gain traction in its push to further expand its Lids brand in Macy's stores and with recent acquisitions in Canada and Ohio. The company also had to be more promotional than expected in some other areas, Montagna noted. His price target for Genesco, on which he has a 'market outperform' rating, is $78. Genesco (Ticker: GCO) closed Wednesday trading at $75.42.

Over at JMP Securities, analyst Peter Martin has trimmed his rating on shares of National Health Investors to 'market perform' from 'outperform' and lifted his $71 price target. The move is based on valuation: NHI (Ticker: NHI) has climbed more than 20 percent over the past three months.

Jan 15, 2015 6:42 AM

Analyst action: Genesco, LP

Mark Montagna at Avondale Partners has slashed his price target for shares of Genesco following the company's disappointing Q3 results. He now sees Nashville-based Genesco — which fell from $80 to $70 on Friday (Ticker: GCO) — climbing to $78 in the coming quarters, down from his previous target of $95. But he is sticking to his 'market outperform' rating, saying that the retailer's main problem is digesting the growth in parts of its Lids hat division and not a fashion issue that will leave it with lots of unsold inventory.

The jump in shares of Louisiana-Pacific Monday — investors bid up the Nashville-based company on news that two of its Canadian rivals plan to join forces — was enough to push Sean Coleman at Longbow Research to the sidelines. The analyst has lowered his rating on LP (Ticker: LPX) to 'neutral' from 'buy.' His price target of $16 — LP ended Monday at $16.83 — is unchanged.

Dec 9, 2014 8:41 AM

How Dollar General could win either way in the fight for Family Dollar

Following the release of Dollar General's third-quarter earnings, analyst Mark Montagna at Avondale Partners has hiked his price target for the Goodlettsville-based company's shares to $76 from $71. He sees a 2015 with a "more normalized EPS trajectory" and higher gross margins. He thinks investors could become more defensive, which could push Dollar General's earnings multiple to 20 from 19.

As to the big fight with Dollar Tree over Family Dollar, Montagna thinks Dollar General will benefit regardless of how things shake out: "If it wins, it will take FDO to its full sales and margin potential. If it loses, we expect enough disruption of FDO from DLTR to accelerate customer defections."

Shares of Dollar General (Ticker: DG) finished Friday up slightly to $68.21. Over the past six months, they're up 18 percent.

Dec 8, 2014 7:12 AM

Jogger pants lifting Genesco sales

Avondale Partners retail analyst Mark Montagna says Genesco's big Journeys brand looks to be off to a strong start to the 2014 holiday shopping season. Recent visits to malls in Houston and Charlotte gave him the impression that jogger pants are driving sales of men's shoes and that other parts of the "athleisure" segment are lifting women's shoe sales.

Importantly, the jogger pant trend appears to be growing across a wide age demographic of African Americans. This ethnic group tends to set the fashion trends for the rest of the teen-young adult cohort. We've seen that with snapback hats and for many, many years with performance athletic sneakers.

One caveat that might restrain Genesco shares a little bit — at least until the holiday numbers come in — is the weakness in the company's Lids hat chain. Montagna said the stores he visited last week were not busy. As of 11:15 a.m., Genesco (Ticker: GCO) was up slightly to $81.28.

Dec 3, 2014 11:21 AM

How food inflation can lift Dollar General

Avondale Partners analyst Mark Montagna says shares of discount retailer Dollar General, which will report its fiscal third-quarter earnings next week, are his favorite name of retailers reporting in the coming weeks. The Goodlettsville-based company is continuing to take market share from its main rivals, he says, but also looks likely to benefit from having beefed up its frozen food offerings in recent years. Montagna points out that recent reports of food inflation have focused on fresh foods and thus will have a greater impact on other retailers.

"This favors DG since it has a minimal presence in fresh foods," Montagna wrote in a note Monday. "Furthermore, such price inflation is likely to push consumers toward shelf stable and frozen items."

Nov 25, 2014 6:59 AM

Avondale takes up target for Kirkland's

Local analyst Mark Montagna at Avondale Partners has hiked his price target for shares of Kirkland's to $27 from $23 following the company's better-than-expected Q3 profit report. He notes that the start of the fourth quarter is tracking nicely and that the company is in line to beat its guidance if the backups many people fear at Western freight ports in the coming weeks turn out to cost less than expected. Also worth noting — and addressed briefly in the company's conference call Thursday — is that Kirkland's now has a cash pile that can enable it to buy back more shares and/or hike its dividend. Shares of the company (Ticker: KIRK) are down slightly today to about $22.35 but that was to be expected after climbing more than 24 percent Thursday.

Nov 21, 2014 12:47 PM

Avondale: Look for Kirkland's to top consensus

Mark Montagna, retail analyst at Avondale Partners, says he's confident that locally based home goods chain Kirkland's will report third-quarter earnings per share of 4 cents, which would be at the top of its guided range and a penny above analysts' consensus estimate. Key to his expectation were the "extremely low Halloween merchandise" on the shelves of several area stores last week as well as the promise of high-margin Christmas items selling well.

Longer term, Montagna likes the company's ability to grow its business, helped by a more consistent store opening pace as well as slowing expense growth, particularly from e-commerce and fulfillment initiatives. That could over the next five years lift the company's stock price to $36 from about $19 today (Ticker: KIRK) as sales and margins tick up.

Nov 11, 2014 10:23 AM

Avondale analyst fears for Tractor Supply margins, market premium

The leaders of farm and ranch products retailer Tractor Supply will report the company's third-quarter earnings Wednesday afternoon. Analyst Mark Montagna at Avondale Partners says he's still concerned about the Brentwood-based company's performance in the past three months and going forward. His main points to watch include the margin pressure from slowing growth in private-label sales as well as tough comparisons to strong sales a year ago. Should the company have fallen short somewhere this past quarter or do so in the near future, Montagna told clients Friday, its long-running valuation premium could be at risk.

The fourth quarter, Montagna said, "is at risk with anniversarying against [last year's] cold Nov-Dec driving strong seasonal sell-thrus with fewer markdowns. We continue to be concerned bigger ticket sales of snow blowers, generators, etc. will be difficult to anniversary."

Montagna rates the stock — which has fallen more than 20 percent so far this year — at 'market perform' and has a price target a little below the $58.83 at which it closed Friday.

Oct 20, 2014 6:42 AM

Dollar General looks to be taking share from M&A target, says Avondale

The fiscal fourth-quarter results from Family Dollar disappointed investors, coming in at 73 cents versus the expected 77 cents. Avondale Partners analyst Mark Montagna points out that the miss comes despite an unexpectedly low tax rate. But Montagna's biggest takeaway is that the numbers suggest Dollar General is taking market share from the company it wants to buy for more than $9 billion: He says it appears the large majority of the 9,000 items in Family Dollar stores posted year-over-year sales drops. "With DG known to have 3%-5% lower prices and a superior assortment than FDO, we expect customers defected toward DG for those other 8000 items," Montagna wrote.

Dollar General will report its third-quarter numbers in early December.

Oct 14, 2014 7:07 AM

Genesco in line to get lift from fashion trends

Athletic influences likely to boost Journeys chain
Aug 26, 2014 7:29 AM