S&P: Accumulate Chico's

Also: Analysts' opinions on Mandalay Resort and Luby's. Plus more

Chico's (CHS ): Maintains 4 STARS (accumulate)

Analyst: Marie Driscoll, CFA

We are disappointed by the 3.6% rise in Chico's August comparable-store sales, vs. 19.4% in the year-ago period, particularly after management had guided 6% to 8% growth. When we spoke with COO and CFO Charlie Klemans, he explained that U.S. Mail disruptions led to a late catalog drop and subsequent fall-off in comparable-store sales, as Chico's catalogs drive store visits. We remain confident in both of the company's growing retail concepts, and expect September comparble-store sale growth to approach 10%. Our 12-month target price remains $50 for this high-beta stock.

Mandalay Resort (MBG ): Maintains 3 STARS (hold)

Analyst: Thomas Graves, CFA

Mandalay posted second-quarter earnings per share of 84 cents, vs. 67 cents, before special items, below our $1.10 estimate partly because of healthcare costs, a higher tax rate, and impact of the table game win percentage at the Mandalay Bay property. We expect the pending acquisition of MBG by MGM Mirage for $71 a share in cash, pending approvals, to be the primary factor affecting Mandalay's share price in the year ahead. We look for the transaction to occur by mid-2005. Our 12-month target price for Mandalay remains $71, about 5% above the current share price. We also expect the dividend to be terminated.

Luby's (LUB ): Initiates with 4 STARS (accumulate)

Analyst: William Mack, CFA

In fiscal 2004 (Aug.) and fiscal 2005, we look for this cafeteria-style restaurant owner to eke out its first annual profit in recent history. We estimate earnings per share of 4 cents this year followed by 15 cents next year. Luby's continues to divest its weaker units, and we think the absence of these under performers will remove what has been a drag on operating margins, if not on comparable sales. We apply a multiple of 9, about the historical average, to our fiscal 2005 EBITDA estimate of $28 million to arrive at our 12-month target price of $8.

Intel (INTC ): Maintains 3 STARS (hold)

Analyst: Amrit Tewary During its mid-quarter update call, Intel guides for lower sales and margins than it earlier expected, and cites a weaker demand picture and an inventory correction as reasons for the reduced expectations. We now see third- and fourth-quarter sales tracking towards the lower end of seasonality. On reduced sales and gross margin expectations, we are cutting our earnings per share estimates to 27 cents from 30 cents for the third quarter, to $1.10 from $1.19 for all of 2004, to $1.29 from $1.40 for 2005, and to $1.24 from $1.35 for 2006. We are cutting our 12-month target price to $23 from $25, based on our p-e model.

CSK Auto (CAO ): Maintains 4 STARS (accumulate)

Analyst: Yogeesh Wagle

The company's July-quarter EPS of 30 cents, vs. 30 cents before debt-retirement charges one year earlier, is in line with our estimate. Sales fell 2.3% overall and 2.5% on a same-store basis, with CSK citing milder summer weather and higher gas prices. We expect continued impact from these factors, and tougher comparisons in the second half. We are cutting our fiscal 2005 (ending January) estimate to $1.30 from $1.40, our fiscal 2006 forecast to $1.60 from $1.67, and our 12-month target price, based on relative analyses, to $14 from $18. Still, given our favorable long-term outlook on auto parts retailing, we would accumulate the stock, which seems to us oversold on recent sales weakness.

Pier 1 Imports (PIR ): Maintains 3 STARS (hold)

Analyst: Yogeesh Wagle

Pier 1 posts 5.8% higher August sales as same-store sales declined 2.8%, a smaller decline than we expected. The company says higher promotional activity and higher average ticket sales helped staunch the sales drop. We see EPS of $1.18 in fiscal 2005 (ending February) and $1.40 in fiscal 2006. At 13 times our fiscal 2006 estimate, the shares trade below peers the and S&P MidCap 400. Still, we would not add to positions, as we see Pier 1 lagging competitors in merchandise presentation and marketing. Hence, our target price of $20, at 14 times our fiscal 2006 forecast, values the shares at a discount to what we regard as more sure-footed peers.

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