PitchDesk | April 25, 2011 | 10:00 a.m. | NYSE Ticker: BKS | Price: $9.

77

Barnes & Noble, Inc.

12-Mo. Target Price: $15.00

Barnes and Noble is the largest bookseller in the United States. As of May 1, 2010 they operated 1,357 bookstores in 50 states and 637 bookstores on college campuses. They have the Nook and an eCommerce website, plus have partnered with Starbucks to provide the best in house coffee shop experience available. The big question at this point isare these book stores worth the risk? Guru investor Bill Ackman has been putting money into Borders for the last year and that company is now in Bankruptcy. Of course, Barnes and Noble is a much better enterprise and has a much stronger brand, so we think that will help them get back to profitability. From a historical standpoint, the company has always done well. After a small hiccup in 2001, they have earned over $13 per share since. Thankfully, the market is an anticipatory vehicle and the stock is priced at a great level because of sour sentiment and unclear future. Chairman Leonard Riggio started the company in the 60's and acquired the Barnes and Noble name in the 70's when the New York bookstore was in decline. Since then, he's taken the pole position in the industry turning B&N into a multi-billion dollar company. Last year sales closed in on $7 billion, but the company lost money for the first time in 10 years. Thus, the price has taken a beating. Last year at this time, BKS was trading around $20 per share. We maintain a target price of $15 per share based on the company getting back to profitability and the market realizing their mistake.

DISCLAIMER: Factual material is obtained from sources believed to be reliable, but the publisher is not responsible for any errors or omissions, or for the results of actions taken based on information contained herein. This material is not intended as an offer or solicitation for the purchase or the sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.