Pantry Shares Jump Amid Analyst’s Improved Rating

The Pantry Inc.’s shares jumped Wednesday after a Lehman Brothers analyst increased her third-quarter and 2008 profit estimates due to better-than-expected gas margins, the Associated Press reported.

The Sanford, N.C. company’s shares jumped $1.51, or 16%, to $10.91 in afternoon trading on Wednesday. Analyst Karen Howland boosted her fiscal third-quarter profit estimate to 24 cents per share, from 16 cents per share, and raised her 2008 estimate to 48 cents per share, from 40 cents per share, the Associated Press reported.

In a note to investors, Howland said she expects gas margins to be 11 cents per gallon, though she’d previously expected a 10.5-cents-per-gallon margin.

Howland said The Pantry’s earnings are "very sensitive" to gas margins and that every penny in the margin adds about 14 cents per share to profit.

The analyst said the company’s margins benefited from cheaper ethanol prices. Ethanol was 22 cents cheaper than clean gas in the quarter, making ethanol sales more attractive, particularly since The Pantry sells ethanol in almost 60% of its stations.

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