Piper Cuts Ests on G-III Apparel Group (GIII) Following Q2 Report; PT Drops to $31

Piper Jaffray is cutting its price target on Neutral-rated G-III Apparel Group (Nasdaq: GIII) from $48 down to $31 following weak Q2 results issued earlier Tuesday.

The firm commented, In addition to Q2's miss, the company issued its Q3 outlook below expectations--$940M in sales vs. our former $1,021M. We are reducing our Q3 EPS from $2.07 to $1.53 (guide: $1.50-$1.60) and our FY17 EPS from $2.55 to $1.90 (guide: $2.20-$2.30). Even with strong outerwear orders planned for Q4 and the new businesses (TH/KL) coming on, we struggle to see the feasibility of the implied level of wholesale sales in guidance. We believe reorders, positive comps and colder weather are implied in the range, which may prove aggressive. Our Q4 EPS of $0.34 (vs. implied $0.62-$0.72) assumes a 16% sales growth and 100% EPS growth. Our estimates do not include DKNY, which we now believe is $0.60+ dilutive in FY18.

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