Jo-Ann Stores initiated with "market perform"

10/28/03 - Wachovia Securities

NEW YORK, October 28 (New Ratings) – Analysts at Wachovia Securities initiate coverage of Jo-Ann Stores, Inc (JAS.A: NYSE) with a "market perform" rating.

Share of Jo-Ann Stores, a US-based retailer of sewing, crafting and home decoration products and accessories, are currently trading at $30.23.

According to Wachovia Securities’ research note published this morning, the company is in the process of a business model transition. Jo-Ann Stores intends to include a larger number of superstore prototypes that focus on crafts in its store base, the analysts say. The analysts explain, however, that such a transition process usually entails a period of higher risk and uncertainty.

Wachovia Securities states that there is low visibility into Jo-Ann Stores’ H2 FY2004 performance. The EPS estimates for this period dependent heavily on a considerable increase in the company’s gross margins, the analysts add. Jo-Ann Stores has, however, been reporting a decline in its margins for the last three consecutive quarters, Wachovia Securities reports. The company’s stock is fairly valued at present.

The EPS estimates for 2003, 2004 and 2005 are $2.32, $2.20 and $2.45, respectively. The P/E estimates for 2003, 2004 and 2005 are 13.0x, 13.7x and 12.3x, respectively.

Wachovia Securities initiates coverage of Jo-Ann Stores, Inc with a "market perform" rating.