Merrill Trims Linens 'N Things to 'Neutral'

Analyst Mark Friedman says he's increasingly concerned about the company's sales acceleration in a challenging environment

Linens 'N Things (LIN ) shares fell Wednesday after Merrill Lynch downgraded them to neutral from buy.

Analyst Mark Friedman says he's increasingly concerned about the company's sales acceleration in a challenging external environment. He sees flat third-quarter comps. He thinks customers may curb spending during the back half of the year. He believes internal initiatives could take longer to significantly impact the top line, mainly due to soft customer traffic in a challenging economy.

He cut his 2002 EPS estimate by $0.06 to $1.57, and his 2003 forecast by $0.07 to $1.83. He says he's more cautious regarding stock appreciation for the rest of the year because of recent channel checks and continued weakness in consumer confidence.