Trans World Earns Analyst Approval11 Apr, 2006 By: Jessica Wolf
Trans World's purchase of Musicland has put the financially beleaguered retail chain on analysts' radar at Wedbush Morgan.
April 10, the firm initiated coverage of Trans World Entertainment with a “buy” rating, setting the 12-month target price at $7.
According to the firm, Trans World Entertainment is poised for healthy earnings growth this year and could see growth of 20% in the next several years.
Last month, just a few weeks prior to finalizing its bid for Musicland, Trans World reported comp store sales for were down 8% for the quarter of 2005 and 6% for the year. A 5% lower company-store count led to a drop of overall sales in the fourth quarter.
Total sales decreased 11%, to $458.6 million, in the fourth quarter and decreased 9%, to $1.2 billion, for the year. Net loss for the year was $1.4 million.
The company declined to give firm guidance on the first quarter of 2006, pending the Musicland acquisition, but executives predicted last month that the company would report a net loss per share in the range of $0.25 to $0.30.
Trans World's stock closed Tuesday, April 11, at $5.38, down about 3.6%.