First Albany upgraded Big 5 Sporting Goods (BGFV) to strong buy from buy.
Analyst Harry Ikenson says he is upgrading on strong operating momentum, increased financial flexibility, and compelling valuation. He says the company continues to enhance shareholder value by using free cash flow to de-leverage its balance sheet. He cites yesterday's news that the company will to redeem another $15 million in senior debt, which should create annualized interest rate savings after taxes of about 3 cents per share.
Ikenson increased his $1.52 2004 EPS estimate to $1.54, and $1.84 for 2005 to $1.87, to reflect the impact of lower expense from redemption. He ups $30 price target to $31. He notes that First Albany has an investment banking relationship with the company.