Goldman Sachs rates ((TRS)) as Buy (1) –The Reject Shop's...

Goldman Sachs rates ((TRS)) as Buy (1) –

The Reject Shop's first-half result materially beat Goldman Sachs's forecasts with the reduction in the costs of doing business (CODB) as a percentage of sales the key positive of the result.

The company has guided on losses on the operating income front in the second half given the impact of the recent lockdowns on sales, and delays associated with shipping/logistics issues.

While these issues are outside of The Reject Shop's control, Goldman Sachs notes the company is executing well against what can be controlled. As a result, the broker expects earnings growth of 63% over FY20-FY23 (compounded annual growth rate).

Buy rating with the target rising to $8.85 from $8.70.
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Jarden rates ((TRS)) as Buy (1) –

Driven by a circa -230bps year-on-year fall in cost of doing business (CODB) margins, The Reject Shop delivered a 30% beat to consensus 1H21 underlying net profit, and around 15% ahead of Jarden’s estimates.

To reflect flat 2H21 year-on-year sales versus prior expectations of a 2% lift, and cost-headwinds from higher freight and adverse foreign exchange hedges, Jarden has cut its FY21 EPS forecasts by around -10% and -6% at the earnings (EBIT) line.

But given Jarden’s view that 2H issues are short term, and the strong 1H21 result is a validation that the strategy and underlying trends are improving, its Buy recommendation and price target of $11.00 remain unchanged.