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

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 Walmart.com.

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.