Ahead of the Bell: Vera Bradley

Three analysts cut price targets for Vera Bradley as company lowers full-year forecasts

Associated Press

NEW YORK (AP) -- Three analysts lowered their price targets for Vera Bradley after the women's accessories maker cut its full-year earnings and revenue forecasts.

Vera Bradley said late Wednesday that it was reducing its outlook because of the uncertain economy. The Fort Wayne, Ind., company now foresees full-year earnings of $1.47 to $1.52 per share on revenue in a range of $535 million to $540 million.

Analysts polled by FactSet predict earnings of $1.71 per share on revenue of $571.4 million.

Ike Boruchow of Sterne, Agee & Leach said in a client note that the lowered guidance was due in part to softening demand and high levels of inventory.

The analyst said that the inventory excess is likely to continue through the end of the year, which could pressure gross margin for at least the next 12 months.

Boruchow maintained a "Neutral" rating and trimmed Vera Bradley's price target to $19 from $20.

Jefferies' Randal Konik is more upbeat on the retailer, saying that the brands differentiation and its appealing stock price should prove to be positive catalysts.

The analyst said that even though Vera Bradley's outlook disappointed, its second-quarter performance was fairly strong in comparison to other retailers' quarterly reports.

Konik reaffirmed a "Buy" rating and lowered its price target to $29 from $34.

Oliver Chen of Citi Investment Research agrees with Konik that Vera Bradley has a differentiated brand, but the analyst says the company needs to roll out more new products, improve its inventory management efforts and do better promotional testing.

Chen kept a "Neutral" rating and cut the retailer's price target to $20 from $25.

A representative for Vera Bradley did not immediately respond to an email seeking comment.

Vera Bradley Inc.'s stock fell $1.67, or 8.6 percent, to $17.78 in after-hours trading on Wednesday. For the year to date, the shares are down 23 percent.

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