Big Lots May Grapple With Negative EBITDA And Cash Burn Next Year: Analyst Cautions
Portfolio Pulse from Nabaparna Bhattacharya
Piper Sandler analyst Peter J. Keith maintained an Underweight rating on Big Lots, Inc. (NYSE:BIG) and lowered the price target from $6.00 to $3.50. Big Lots reported a 14.7% year-on-year sales decline in Q3 FY23, missing estimates. Keith anticipates continued comparable sales challenges in 2024, expecting negative EBITDA and cash burn. Despite cost-cutting efforts, including a $300 million reduction, and inventory management, Keith warns that increased closeout buys could lead to higher inventory and working capital commitments. He forecasts FY23 revenues of $4.725 billion with an EPS loss of $(11.05). BIG shares rose 19.45% to $6.30 on the last check Friday.
December 01, 2023 | 7:55 pm
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Piper Sandler analyst Peter J. Keith reiterated an Underweight rating on Big Lots and lowered the price target to $3.50, citing sales decline, anticipated negative EBITDA, and cash burn for the next year. Despite cost-cutting efforts, increased closeout buys may raise inventory levels.
The reduction in price target and the Underweight rating by a prominent analyst, along with the forecast of negative EBITDA and cash burn, are likely to negatively impact investor sentiment in the short term. The recent rise in stock price may be a temporary reaction, and the underlying financial challenges could exert downward pressure on the stock.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100