Wedbush Raises Price Target on Zumiez, Inc. (ZUMZ) to $18; Reiterates Neutral
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Wedbush reiterated a Neutral rating on Zumiez, Inc. (NASDAQ: ZUMZ), and raised the price target to $18.00 (from $15.00), as September sales come in better than expected. ZUMZ reported sales up 6.3% versus consensus expectations for a 1% decline. Positive sales were driven by men’s, accessories, and juniors. 3Q sales were guided up to $216- $217 million up from $209-$213 million (versus consensus of $209 million), with EPS guided to $0.29-$0.30 from $0.21-$0.26 previously (versus consensus of $0.25).
Analyst Morry Brown commented, "Following a sharp improvement in September comps (against tougher comparisons), we have increased our earnings estimates. We note strong September sales were expected, with market expectations baking in a return to positive comps following strong commentary on the first week and half of September (provided on the August sales call). Still, the +6.3% SSS increase was beyond what we were hearing from most of the buy side. Given the traction in September, and with comparisons easing into 4Q, a continuation of positive comps through year end appears likely at this point. That said, we would note the stock appears to price in both (1) continued strong comp sales gains and (2) significant EBIT margin claw back. We believe there are more questions around the latter point, as visibility into EBIT margin expansion remains somewhat limited given pressure from internal investments and wage increases. We remain NEUTRAL, and look to become more confident in margin expansion to become more constructive."
Shares of Zumiez, Inc. closed at $18.27 yesterday.
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