Why Wedbush Loves Express, Francesca's, Kate Spade And Lululemon After The Holidays
Wedbush issued a report highlighting several retailers after the holidays including Lululemon Athletica Inc. (NASDAQ: LULU), Express Inc. (NYSE: EXPR), Kate Spade & Co. (NYSE: KATE), and Francesca's Holdings Corp (NASDAQ: FRAN). Analysts at Wedbush, including Morry Brown, Lupine Skelly and Taryn Kuida, see strength in each of these retailers going into the new year.
Express: Rated as Overweight with a $26 price target
"Sales and margin continue to show meaningful YOY improvement...a significantly improved inventory position bolsters confidence in the margin opportunity, and improvement in merchandise execution should continue to benefit the top line including the success of new introductions..."
Wedbush analysts were also impressed by the strong traffic in Express's stores even with similar promotions to last year.
Francesca's: Rated as Overweight with a $19 price target
"Our outperform rating...is based on improved channel checks for 2H, significant margin opportunity in 4Q against easy comparisons and valuation expansion opportunity if fundamentals improve..."
After checks at stores, analysts note that Francesca's clearance levels are down year over year which is a positive trend for the retailer.
Kate Spade & Company: Rated as Overweight with a $32 price target
"...the company's early stage growth, margin expansion and earnings power are not fully valued by the market at current levels...Additionally, our checks have consistently noted KATE as the least promotional and best merchandised handbag brand compared to peers."
Lululemon: rated as Overweight with a $56 price target
Wedbush sees multiple potential catalysts including:
1. Multi-Year margin opportunity in seasonal product
2. M&A speculation
3. International growth
Analysts also saw increased traffic in Lululemon which showed strength because of the lack of markdowns in the company's stores.
Latest Ratings for LULU
Dec 2015 | Bernstein | Downgrades | Outperform | Market Perform |
Dec 2015 | Deutsche Bank | Maintains | Hold | |
Nov 2015 | FBR Capital | Downgrades | Market Perform | Underperform |
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