Analyst Picks and Pans: Family Dollar, Cirrus Logic, NutriSystem

What Wall Street analysts are saying about selected stocks in the news Tuesday

Family Dollar Stores (FDO)

BMO Capital Markets upgrades to outperform from market perform

BMO Capital Markets analyst Wayne Hood lifted his rating on Family Dollar Stores Inc. on Oct. 6, noting the stock has lost 14% of its value since early July. Hood said the stock now represents a good buying opportunity. "The stock is as cheap as it's been in years," he wrote in a client note.

"We believe investors are presently struggling to find new ideas with reasonable (stock prices), above average returns on capital, strong free cash flow yield and good long-term growth prospects. We see all of these in Family Dollar," he wrote.

The Charlotte, N.C.-based retailer is scheduled to report its fiscal fourth-quarter results on Oct. 7. On average, analysts polled by Thomson Reuters predict income of 41 cents per share on revenue of $1.81 billion.

Cirrus Logic (CRUS)

Needham & Co. rates buy; raises estimates, price target

Needham analyst Vernon Essi, Jr., said on Oct. 6 that Cirrus preannounced second-quarter revenues of about $55.7 million, 11% above the midpoint of its prior guidance range; augmenting the upside is that gross margin will be at higher end of its prior 50%-52% guidance range, implying the company can maintain margins against a shift in its business mix toward what's being perceived as lower-margin portable audio business.

The analyst notes the company's audio business is benefiting from a revenue ramp-up in key smartphone programs, as well as continued penetration within a legacy portable audio customer. He raised his fiscal 2010 (ending March) earnings estimate from 22 cents per share to 28 cents, and his $8 price target to $9.

NutriSystem (NTRI)

Janney Montgomery Scott keeps neutral

NutriSystem shares jumped 25% in premarket trading on Oct. 6 after the company said its weight-loss program would be available beginning this week at Wal-Mart (WMT) stores.

NutriSystem said the retailer will begin selling its 14-Day starter weight loss program nationwide this week at more than 3,200 Wal-Mart stores. It will mark the first time Nutrisystem's products have been available at retail stores. The 14-day program costs $148 and gives consumers access to weight-loss counseling for 24 hours a day all week. It will also be available on

Janney Montgomery Scott research analyst Mitchell B. Pinheiro said on Oct. 6 the distribution in Wal-Mart gives consumers access to NutriSystem's products on a much bigger scale.

"We believe NutriSystem management continues to place the company in a position to benefit ultimately from a consumer recovery, with increased exposure and improved value through Schwan's, Costco and now Wal-Mart," Pinheiro wrote in a client note.

However, Janney doesn't expect this to boost results significantly in the fourth quarter because NutriSystem isn't going to market it heavily ahead of the holidays.

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