Jefferies Raises Price Target on Quiksilver (ZQK), Staying Afloat in Europe

September 2, 2011 7:37 AM EDT Send to a Friend
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Price: $1.75 -4.89%

Rating Summary:
    2 Buy, 13 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 29 | Down: 45 | New: 4
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Jefferies is maintaining its Buy rating on shares of Quiksilver (NYSE: ZQK) and is increasing its price target slightly from $4.50 to $5.00.

The company released its third quarter results with earnings coming in blow expectations and sales beating them. The firm notes the earnings miss was largely due to high than expected SG&A, which includes investments in QuiksilverPro event, DC's Street League, Quik Girls, and e-commerce. Also, same-store-sales in the U.S. grew 21 percent over the quarter.

Unlike its largest competitor Billabong, Quiksilver's European business is holding strong despite the economic turmoil in Europe. Jefferies believes that the company is outpacing its peers due to its strong market positioning in Europe, growth in new and underdeveloped countries, and strong product innovation.

An analyst at Jefferies comments, "Consistent with our upgrade thesis in March, we view ZQK as a top-line story as management is no longer burdened with the distraction of of balance sheet / non-issues and instead, redirects its focus on driving global sales growth across a strong brand portfolio."

Although Jefferies is raised its price target to $5 on ZQK, due to current market trends the firm is cutting its 2011 and 2012 EPS estimates from $0.29 and $0.41 to $0.19 and $0.28. They also reduced that EBITDA estimates from $206 million and $229 million to $187 million and $203 million.

Shares of ZQK closed down on September 1 by $0.06 or 1.44 percent to $4.12.

For more ratings news on Quiksilver click here and for the rating history of Quiksilver click here.

Shares of Quiksilver closed at $4.12 yesterday.


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