Nomura Securities Starts Ethan Allen Interiors (ETH) at Neutral

Nomura Securities initiates coverage on Ethan Allen Interiors (NYSE: ETH) with a Neutral rating and a price target of $26.00.

Analyst Jessica Schoen Mace states, "We believe that Ethan Allen has the right strategy in place for fueling growth, as it possesses a number of competitive advantages and the ability to leverage its vertically integrated business model. We are optimistic about the company’s Fall 2014 product launch (the largest in the company’s history by a factor of 5). That said, the company has generated soft top-line trends for several quarters, and we have yet to see a meaningful benefit from the several strategic initiatives implemented in the last 18 months (as sales trends have been flattish). We believe that this warrants some caution in the near term. However, as these initiatives gain solid traction, we think the leverage within the business model should drive healthy returns. We estimate that, on peak sales volumes of $1.1bn, the company could drive more than $3.25 of EPS power. We are below the Street for 1H15 and FY15, given the potential profitability implications of the product launch. We are initiating with a Neutral rating to balance the risk of returning the
business to sales growth."

For an analyst ratings summary and ratings history on Ethan Allen Interiors click here. For more ratings news on Ethan Allen Interiors click here.

Shares of Ethan Allen Interiors closed at $23.24 yesterday.

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