Mizuho Securities Cuts Price Target on Express (EXPR) Following 3Q Miss
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Mizuho Securities maintained an Outperform rating on Express Inc. (NYSE: EXPR), and cut the price target to $13.00 (from $14.00), following the company's 3Q earnings release. 3Q EPS of $0.11 was below the consensus estimate of $0.13. Sales declined to $506.1mm with a +15% increase in DTC sales. Given the difficult traffic environment and merchandising adjustments underway, Mizuho lowered 4Q EPS estimates to $0.26 from $0.50 prior, relative to guidance for $0.26-0.30.
Analyst Betty Chen commented, "Although traffic and merchandising led to the disappointing 3Q results and 4Q guidance, we believe EXPR made sequential progress in improving customer engagement and adjusting the assortment, as evidenced by the 15% growth in eCommerce. While 4Q topline and margins will remain pressured, the setup for FY17 appears favorable given: 1) easier comparisons with strength online, 2) favorable fashion trends and cleaner inventory, 3) additional $20mm in cost savings or ~$0.15 in EPS, and 4) benefit of new system implementation. With a discounted valuation of 12x P/E and 3.5x EBITDA, we believe the risk/reward is favorable."
Shares of Express Inc. closed at $13.36 yesterday.
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