Market Insider

Big Lots slips amid Deutsche Bank downgrade

David Kohl-USA TODAY Sports | Reuters

Shares of Big Lots fell 3.8 percent Monday after Deutsche Bank released a bearish report on the stock.

The bank downgraded the discount retailer to "hold" from "buy" and cut its price target on the company to $47 from $49, citing Wal-Mart's recent success, new overtime pay rules, and more online promotions to get more visibility, as potential headwinds. The stock traded around $43 on Monday.

"On the latter point, we have been disappointed with visit count to Biglots.com (as measured by comScore) given the launch of the new e-commerce transactional site. Net, we see less opportunity for upside to the company's guidance and have lowered our forecast accordingly," Deutsche said in a Monday note to clients.

An employee arranges merchandise at a Dollar General store in Arvada, Colorado.
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"We have growing concerns around BIG's ability to capture further mindshare in a competitive backdrop. While BIG doesn't need positive traffic to post positive comps, we are increasingly worried about weakening retail traffic trends which places more weight on a healthy furniture business for BIG."

The bank also lowered its first-quarter and full-year earnings estimate for Big Lots. The retailer is scheduled to report first-quarter results on Thursday.

Big Lots shares have advanced nearly 9 percent this year, but have fallen 8.7 percent over the past six months.

BIG 6-month performance

Source: FactSet

Disclosure: Deutsche makes a market in Big Lots shares.