Big Lots Stock Falls despite Telsey Advisory Group’s Upgrade

Today, CNBC reported that Telsey Advisory Group upgraded Big Lots (NYSE:BIG) from “market perform” to “outperform.” The firm also increased its 12-month target price from $20 to $31. Telsey Advisory Group was impressed by Big Lots’s strategic transformation plan and its strong financial position. The new target price represents a return potential of 29.1% from its closing price of $24.02 on May 1.

Other analysts’ recommendations for Big Lots

Since the beginning of April, Piper Sandlers and JPMorgan Chase have upgraded Big Lots and raised their target prices. On May 1, Piper Sandler upgraded the stock from “neutral” to “overweight.” The firm also increased the company’s target price from $21 to $34. On April 9, JPMorgan Chase upgraded the stock from “underweight” to “neutral” and increased its target price from $14 to $21. However, Deutsche Bank cut its target price from $26 to $19 on April 6.

Wall Street favors a “hold” rating for the stock. Among the eight analysts, 62.5% recommend a “hold,” 25% recommend a “buy,” and 12.5% recommend a “sell.” As of today, analysts’ 12-month target price is $19.83, which represents a fall of 17.4% from its closing price on May 1.

Stock performance

Despite the upgrade from Telsey Advisory Group, Big Lots was trading 2.0% lower at 11:19 AM ET. There’s a weakness in the broader equity market due to increased tensions between the US and China amid COVID-19. The weakness dragged the company’s stock down. Today, the S&P 500 Index was trading 0.4% down at the same time.

Amid the global sell-off in the broader equity markets, Big Lots’ stock price fell to a low of $10.13 on March 16. Since then, the company has made a significant recovery. Big Lots trades at $24.02 as of May 1, which represents an increase of 137.1% from its March 16 lows. On April 8, the company announced an agreement to sell and lease back its four distribution centers with Oak Street Real Estate Capital. The company expects to raise $550 million from the deal after deducting the net expenses and taxes. Big Lots intends to pay its debt and utilize the amount to fund its growth initiatives after the market stabilizes. The company’s announcement to lower its debt and the stronger the broader equity market led to a rise in the company’s stock price.

So far this year, Big Lots has lost 16.4% of its stock value. The company has underperformed Dollar General (NYSE:DG) and the S&P 500 Index. Dollar General has increased by 11.8% YTD, while the S&P 500 Index has declined by 12.4%. Meanwhile, Dollar Tree (NASDAQ:DLTR), which beat analysts’ EPS expectations in its latest quarter, has fallen by 18.3% YTD.