Southwest Securities raised its estimates on Movie Gallery (MOVI ).
Analyst Arvind Bhatia says the video-rental company's same-store sales came in above its low, single-digit forecast, as well as his 3% forecast. To stay in line with Movie Gallery's raised guidance, Bhatia upped the 27 third-quarter earnings per share estimate to 29 cents, raised the $1.54 2003 estimate to $1.56, and upped the $1.76 2004 estimate to $1.79.
He likes Movie Gallery for many reasons, including its position as a low-cost operator; its focus on rural and secondary markets (it has the potential to open 6,000 stores, up from the 2,050 stores that exist today), where only 30% of its stores overlap with Blockbuster and Hollywood Video. Bhatia also likes its minimal exposure to technology threats in a digital entertainment. He keeps his strong buy rating and $27 target.