Mizuho Securities Remains Sidelined on Guess? (GES) Following 3Q Report
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Mizuho Securities maintained a Neutral rating on Guess (NYSE: GES), and cut the price target to $14.00 (from $17.00), following 3Q report and guidance. GES reported EPS of $0.11, below the Street’s $0.14 estimate. American’s retail and wholesale businesses remain under pressure, driven by unseasonably warm weather and weakness in traffic.
Analyst Betty Chen commented, "On the heels of disappointing 3Q results due to weakness in the Americas and lingering impact into 4Q, we further reduced our estimates in anticipation of clearance activities and lack of clarity on when the region will turn. Though management’s four-prong strategy ranging from store closures, rent relief, digital investments, to supply chain initiatives may bear fruit longer-term, we believe a turnaround will prove prolonged amidst declining footfall. While GES enjoys $325mm of net cash and historically maintained a prudent approach to capital allocation, the use of ~$170mm on capex and dividends coupled with minimal OCF in FY16 may give investors pause."
Shares of Guess closed at $15.32 yesterday.
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