FBR Capital Reiterates Outperform on Chicos FAS (CHS) Following Analyst Day
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FBR Capital reiterated an Outperform rating and $17.00 price target on Chico's, Inc. (NYSE: CHS) following the company's analyst day. Management believes a return to 10% op margin is achievable by 2019 from 2016E of 5.5%. The primary drivers should include gross margin recovery, SG&A, and rowth opportunities. Also, CHS has implemented most omni tech capabilities over the last several years and will implement the last piece in 2017, which will put it significantly ahead of peers in terms of omni capabilities.
Analyst Susan Anderson commented, "On September 28, CHS hosted an upbeat analyst day in NYC, where we heard management presentations from Shelley Broader (CEO) and Todd Vogensen (CFO). We came away impressed with CHS's cost-cutting, margin driving, and revenue growth opportunities. Our main takeaways include: (1) expected return to 10% op margin by 2019, (2) first class omni-channel capabilities will help drive revenue and margins, (3) accelerated store rationalization and impressive retention rate should benefit comps, (4) analytics will drive supply-chain efficiencies, (5) demographics are trending in CHS's favor, (6) Chico's has numerous product launches/extensions that could drive results, and (7) WHBM is focused on diversifying offerings. The analyst day reaffirmed our belief that CHS is one of the most forward-thinking retailers and significant margin and growth potential remains. We continue to like its differentiated model and reiterate our Outperform rating."
Shares of Chico's, Inc. closed at $12.03 yesterday.
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