Banc of America Upgrades Hot Topic to Buy

Analyst Amy Wilcox Noblin says the company remains one of the superior operators in the softlines retailing space

Hot Topic (HOTT ) reported 1.1% higher September same-store sales. Banc of America upgrades the stock to buy.

Analyst Amy Wilcox Noblin says Hot Topic remains one of the superior operators in the softlines retailing space with strong, differentiated concepts. She says, while the preppy cycle is likely to continue, she thinks the company has found way to mitigate the impact and potentially restore positive comps. She sees Hot Topic as a solid 20% grower long term.

Wilcox Noblin has increasing confidence in her forward estimates. She maintains 53 cents fourth-quarter earnings per share estimate, which assumes flat comps. However, she boosts fiscal year 2005 (January) EPS forecast to $1.02 from 95 cents, fiscal year 2006 to $1.22 from $1.14, and fiscal year 2007 to $1.45 from $1.36. She has a $23 price target on the stock.