UPDATE: J.P. Morgan Upgrades Big Lots on Balanced Risk/Reward

In a report published Monday, J.P. Morgan analyst Matthew R. Boss upgraded the rating on Big Lots (NYSE: BIG) from Underweight to Neutral, and raised the price target from $28.00 to $32.00.

In the report, J.P. Morgan noted, “We are upgrading Big Lots to Neutral from Underweight with the risk/reward more balanced following 40% underperformance over the past year (-22% vs. SPX +18%). While structural questions remain (30K sq ft boxes, closeout competition, online), the setup has changed since our downgrade to Underweight last year (8/10/12: Micro Issues & Discretionary Mix; Wrong Place at The Wrong Time; Downgrade to UW) given the combination of (1) easing discretionary comparisons (Home & Furniture compares ease ~500bps in 2H), (2) 3 initiative tests in process (coolers/SNAP, remodel program, and urban stores), and (3) new management at the helm (CEO on 4/30) with the stock now pricing in a 2Q miss and 2H guidance reduction (trading sub-5x EBITDA) given lateral retail prints, in our view.”

Big Lots closed on Friday at $32.25.