Stifel Boosts PT on Tailored Brands (TLRD) to $18 Following Q2 Report; Maintains at 'Hold'
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Stifel boosts its price target on Hold-rated Tailored Brands (NYSE: TLRD) from $14 to $18 following Q2 results reported Wednesday night.
Analyst Richard Jaffe noted the following:
2Q was well managed despite a difficult environment for retail as the company continues to tightly control expenses while investing in its strategic initiatives. Management indicated that sales trends softened following Father’s Day on June 19. However, the MW division posted a +2.9% comp versus +3.1% LY. This was likely due to the ongoing appeal of the MW merchandise offerings including Joseph Abboud and custom suit and shirt initiatives. Additionally, the tuxedo rental comp increased 4.7%. All other divisions comped negatively.
Results continue to be held back by the JAB division as the brand transitions away from unsustainable promotions which have driven significant comp declines. However, the division will lap the margin-eroding buy one, get three free promotion in 3Q, creating an easier comparison for 4Q when comps are anticipated to be slightly positive.
On the firm's Hold raing, Jaffe said,
While we anticipate outperformance at the legacy divisions, the JAB business remains challenged to drive traffic and sales. While comps are anticipated to improve in 4Q when the division laps an easier comparison, management expects JAB comps to decline in the low double digits in 2016. Given the infrequent shopping habits of the male consumer and the need to 1) re-educate the core Bank’s customer and 2) attract a new customer, the turnaround will likely be prolonged. Our target price of $18 assumes an approximate 9x multiple on our 2017 EPS estimate of $2.05, at a modest discount to the two year average out year consensus multiple of 11x, which we view as appropriate given the timing of JAB’s improvement remains uncertain.
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