WR Hambrecht cut its estimates on Dollar Tree Stores (DLTR ).
The discount-retail chain posted 31 cents third-quarter earnings per share on a 19% net sales rise. Analyst David Yamamoto says the third-quarter earnings per share were in line, while sales came in at the low end of guidance. He notes Dollar Tree reiterated fourth-quarter guidance of $880 million to $905 million in net sales, and flat-to-3%-higher comparison sales, or sales at stores open for at least one year.
At the same time, Yamamoto says investors are likely to react negatively to the fiscal 2005 (Jan.) guidance, which calls for $3.2 billion to $3.3 billion in net sales, and 0.5% to 1% higher comparison sales. He thinks the forward guidance will prove to be overly conservative . Nonetheless, he trimmed the 70 cents fourth-quarter earnings per share estimate to 69 cents, cut the $1.55 fiscal 2004 estimate to $1.54, and reduced the $1.86 fiscal 2005 estimate to $1.80.
Based on his valuation and outlook, Yamamoto is keeping his buy rating and the $44 price target.