May 20, 2022
Big Lots store

Shares of Big Lots fell today after Piper Sandler downgraded the retail to neutral from its previous overweight rating, also adjusting its price target for the firm to $50.

Piper Sandler analyst Peter Keith lowered his share-price target based on fundamentals, prompting a sell-off that saw the stock 5.2% down at $45.05.

“We see a trifecta of macro headwinds impacting fundamentals through the first half of 2022,” wrote Mr. Keith in a note, adding that he expected “stimulus check tailwinds” to come to an end and noting that the continuing incline in shipping prices is likely to have an impact on margins.

“While we believe BIG has several emerging sales/margin drivers that should benefit fundamentals longer-term, near-term macro headwinds are likely to overshadow underlying improvement,” he added.

The news is another blow for Big Lots, who last month missed estimates on fiscal second quarter profit and revenue. The stock has been on a downward trajectory since June, when it hit a peak of $72.31.

The discount retailer, which has over 1,400 stores, was one of the best performing retail stocks in 2020, benefitting from a controversial decision to include its stores as “essential”. The company has fared much worse through 2021 though, in part due to competitors being allowed to reopen stores again following the loosening of pandemic measures.

The latest results posted by the firm show earnings down to $1.09 a share from $11.29 a share in the same period the previous year, whilst revenue declined to $1.46 billion from $1.64 billion a year earlier. Sales dropped by 13%, putting a dent in the 31% increase seen the previous year.