KeyBanc Downgrades Perry Ellis (PERY) to Hold

KeyBanc downgraded Perry Ellis (NASDAQ: PERY) from Buy to Hold and removed its price target (prior $20.00). After achieving his price target, analyst Edward Yruma thinks valuation looks fair.

"The 2Q marks the second quarter of better-than-expected earnings, due in large part to greater operational discipline and focus. The stock is up 28.3% since January 1 (vs. 7.8% for the S&P 500), due in large part to the stabilized results. We continue to expect further gross margin improvement (the 2Q was up +224 bps year-over-year) as the Company continues to realign resources on areas of strength (Perry, OPG, Golf), as well as further SG&A discipline," said Yruma. "We continue to have a fairly circumspect view on overall apparel demand within the middle-income consumer (cautious commentary from Macy's, Stage, Kohl’s and Target, among others). PERY looks a little full at 19.1x 2015E P/E and 8.2x 2015E EV/EBITDA, but less so on 0.4x EV/sales. As such, on balance, we think valuation looks fair, but remain optimistic from an operational perspective."

For an analyst ratings summary and ratings history on Perry Ellis click here. For more ratings news on Perry Ellis click here.

Shares of Perry Ellis closed at $20.25 yesterday.

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