AG Edwards Upgrades Hot Topic to Buy

Analyst Robert Buchanan sees strong earnings growth for the specialty retailer through fiscal 2006

AG Edwards upgraded Hot Topic (HOTT ) to buy from hold.

Analyst Robert Buchanan says his upgrade of the specialty retailer is based on his forecast for more than 22% earnings per share growth for all of fiscal 2006 (Jan.), on top of his expectation for 14% growth in fiscal 2005. Moving forward, he looks for Hot Topic to be more assertive regarding tonnage commitments on accessory items that are testing well, especially during the back-to-school period.

Buchanan views CEO Betsy McLaughlin as an assertive, fast-paced leader who actively listens to her customers. He sees $1.10 fiscal 2005 earnings per share, and $1.35 in fiscal 2006, and has a $29 12- to 18-month price target.