Q4 Preview: Michael Kors (KORS) Hints at Strong Numbers; Investors Eye Lock-Up Expiration

June 11, 2012 2:18 PM EDT
Get Alerts KORS Hot Sheet
Price: $42.21 +0.43%

Rating Summary:
    8 Buy, 29 Hold, 3 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 29 | Down: 29 | New: 23
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Michael Kors (NYSE: KORS) shares are trading higher ahead of its fourth-quarter 2012 release, expected out before the market opens Tuesday morning.

This will be Kors' second report since IPOing last December. It's third-quarter report beat on the top- and bottom-lines, with EPS of 20 cents and revs of $373.6 million. Shares are up 15.7 percent since.

For the upcoming report, the Street is looking for EPS of 16 cents and revs of $360.6 million. The number follows a March 19th update from the company which pushed its expected EPS range from 10 cents to 12 cents up to a new range of 14 cents to 16 cents. Sales were said to be in the range of $350 million to $360 million, with gross margin in the range of 55.5 percent to 56.5 percent.

Shares of Kors moved 71 percent higher through the quarter to $46.59 at the end of March. The stock receded a bit and is now up just 55.8 percent from its IPO price of $25.

Investors might be looking at Coach (NYSE: COH), Fossil (Nasdaq: FOSL), Ralph Lauren (NYSE: RL), and, to a lesser extent, Tiffany (NYSE: TIF), heading into results. Both companies fared well in the most recent quarter, but warned about increasing macro pressures moving through the rest of 2012.

Bloomberg data has nine analysts at Buy, none at Hold, and one with a Sell on Kors. The Street's price target average is $52.50 and ranges from $48 to $60. Kors shares have moved between $23.50 and $50.69 over the last half year.

Wedbush sees upside in Kors stock amid the pre-announcement in April, as fourth-quarter channel checks were "very positive" and quarter-to-date checks also indicated continued momentum. The firm sees one of the bigger risks as the upcoming lock-up expiration as well as watches becoming more of a seasonal item.

On watches, Wedbush believes the recent 48 percent gain in sales is more of a trend rather than a fad.

Unlike market expectations Coach sales indicate sluggish sales across the industry, Wedbush thinks Kors may be taking market share from Coach. In addition, the firm doesn't see Kors as a luxury segment player like Coach or Tiffany.

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Kors' past performance at Streetinsider's Kors' Income Statement.

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