The Zacks Analyst Blog Highlights: Post Holding, Target, Barnes & Noble, Kirkland's and TJX

CHICAGO, Jan. 21, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Post Holding Inc (NYSE:POST-Free Report), Target Corp. (NYSE:TGT-Free Report), Barnes & Noble, Inc. (NYSE:BKS-Free Report),Kirkland's Inc. (Nasdaq:KIRK-Free Report) and TJX Companies, Inc. (NYSE:TJX-Free Report).

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Here are highlights from Monday's Analyst Blog:

Post Holdings Upped to Strong Buy

Zacks Investment Research upgraded Post Holding Inc (NYSE:POST-Free Report) to a Zacks Rank #1 (Strong Buy) on Jan 17, driven by back-to-back acquisitions announced in the recent past.

Why the Upgrade?

On Jan 2, this cereal maker completed the acquisition of private label pasta manufacturer Dakota Growers Pasta Company, Inc. for $370 million. The company has plans to create a unit, combining Dakota Growers and Golden Boy Foods Ltd., whose acquisition was announced in Dec 2013.

Golden Boy is a North American manufacturer of private label peanut and other nut butters, as well as dried fruit, baking and snacking nuts. Golden Boy is a key supplier to the U.S. and Canadian retail and foodservice channels. Post Holdings has agreed to pay Canadian $320 million for Golden Boy on a cash-free, debt-free basis and the transaction is expected to be complete in Feb 2014.

The company believes that the combination of Dakota Growers and Golden Boy will bear fruits as it will beef up the company's private label products of both Dakota Growers and Golden Boy as well as expand the active nutrition categories of the company. The combined unit will have annual net sales in excess of $500 million.

In Dec 2013, Post Holdings also agreed to buy privately owned Dymatize for $380 million, along with the announcement of Golden Boy acquisition. The Dymatize deal is also expected to close in Feb 2014 and includes a contingent payment of up to $17.5 million.

Dymatize manufactures and markets premium protein powders, bars and nutritional supplements under the Dymatize and Supreme Protein brands. The acquisition of Dymatize comes three months after Post Holdings bought the branded food and beverage business of Premier Nutrition Corp., a maker of products like vanilla shakes.

Post Holdings believes that adding Dymatize to its business would enable it to serve a different set of customers compared to the former Premier Nutrition Corp. assets. Dymatize supplies speciality U.S. stores, plus food, drug and mass merchandise outlets. Premier sells into club stores, as well as the food, drug and mass channels.

The company has been concentrating on active nutrition and private label since the last one year in order to transform the company from a low-growth, single-category participant to a more diversified consumer products enterprise, with a better product portfolio and stronger participation in retail channels and categories. The acquisition of Attune Foods (in Jan 2013) and the Hearthside's Golden Temple granola business (May 2013) provided entry into the natural specialty channels, where natural and organic cereals are experiencing high single-digit growth.

Target Downed to Strong Sell

Zacks Investment Research downgraded Target Corp. (NYSE:TGT-Free Report) to a Zacks Rank #5 (Strong Sell) on Jan 15.

Why the Downgrade?

Target has witnessed sharp downward estimate revisions after the public acknowledgement of the massive security breach that affected nearly 70 million customers and the subsequent trimming of its fourth-quarter fiscal 2013 guidance. The company's stock price hit a 52-week low of $59.87 on Jan 17, 2014. Since the announcement of the breach, Target has lost 3.1% of its market capitalization.

The company now expects adjusted earnings per share for its U.S. segment in the range of $1.20 to $1.30, compared with the previous projection of $1.50 to $1.60. Further, comparable store sales are expected to decline 2.5% in the fourth quarter as against flat comps forecasted earlier.

Target faced its worst security breach when information related to credit and debit card holders were hacked. The theft occurred during the holiday season, from a day before Thanksgiving up to Dec 15. The company publicly recognized the breach four days later on Dec 19, 2013.

Recently, as part of the ongoing inquiry, Target had disclosed that the data theft included names, mailing and email addresses as well as phone numbers. Notably, the company has extended help to aggrieved customers by offering one year of complimentary credit monitoring and identity theft safeguard. Target's customers have three months to register for the program.

Moreover, Target, as per media reports, has been slapped with several lawsuits in the past few days over the fallout from the security breach, thereby increasing its legal woes. We feel more troubles could brew for the specialty retailer ahead.  

The Zacks Consensus Estimate for fiscal 2013 decreased 16.1% to $3.23 per share over the last 60 days. For fiscal 2014, most of the estimates were revised downward, over the last 60 days, dragging the Zacks Consensus Estimate by 10.3% to $4.43 per share.

Other Stocks to Consider

Some better-ranked retail stocks worth considering for investment purpose include Barnes & Noble, Inc. (NYSE:BKS-Free Report),Kirkland's Inc. (Nasdaq:KIRK-Free Report) and The TJX Companies, Inc. (NYSE:TJX-Free Report). While Barnes & Noble and Kirkland's sport a Zacks Rank #1 (Strong Buy), TJX Companies carries a Zacks Rank #2 (Buy).

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