Piper Jaffray Cuts 99 Cents Only to Underperform

Analyst Mitchell Kaiser says the shares have been bid up on expectations of improved economic conditions that aren't likely to happen

Piper Jaffray downgraded 99 Cents Only Stores (NDN) to underperform from market perform, explaining that the companies shares have been up about 22% since the beginning of the year.

Analyst Mitchell Kaiser says prices are higher on expectations of improved economic conditions for lower-income consumers, among other things. He does not see such catalysts for 99 Cents Only Stores shares happening. He says 1.8% March same-store sales comparables are slightly below his 2.0% estimate. He notes that since 1999, 99 Cents Only Stores has experienced significant operating margin erosion due to higher Selling General & Administrative expenses. He does not believe 99 Cents Only has a clear plan for turning around. He keeps a $10 stock price target.

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