Target's ( TGT) announcement last week that it will probably put its two department store chains up for auction had Wall Street buzzing, but at least one analyst found the news inauspicious, saying the best time to sell passed long ago.

"The current optimism, on both pricing and the stand-alone growth excitement of Target stores, is unwarranted on a number of levels," said Eric Beder, an analyst at Northeast Securities.

Beder said in a research note that without the Mervyn's and Marshall Field's stores in the company's repertoire, investors are sure to notice that Target has had less-than-steady EPS growth in the past few years -- a trend he sees continuing in 2004. Moreover, the chains aren't as valuable as they once were.

"Given the almost 40% drop in EBITDA for these units since their peak in 1998, it is obvious that the optimum time for selling Mervyn's and Marshall Field's has passed," said Beder, who has a sell rating on the stock. Earnings before interest, taxes, depreciation and amortization at Marshall Field's were $414 million in 1998 and $429 million in 1999, compared to $222 million in 2003.

Last Wednesday , Target said it will seek "strategic alternatives" for the two department store chains -- holdovers from the old Dayton Hudson empire from which Target sprang. After the news, the company's investment rating was upgraded by several brokerages, including Credit Suisse First Boston, SunTrust Robinson Humphrey and Smith Barney Citigroup.

Shares of Target jumped about 7% in the first day of regular trading after the news and reached an all-time intraday high of $45.86 on March 12. The shares were recently fetching about $45.

Mervyn's and Marshall Field's have been a drag on Target for years. Both have had negative same-store sales in each quarter since mid-2001, and 2000 was not a great year either. For full-year 2003, Mervyn's pretax earnings fell 32.6% to $160 million on a 6.9% drop in sales, while Marshall Field's pretax profit dropped 21.1% to $107 million on a 2.6% decrease in sales, according to Target's financial statements.

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