Francesca's (FRAN) saw Strong Holiday Sales as Momentum Carried Through; Stifel Affirms at 'Hold'

Stifel reaffirms Francesca's Holdings (Nasdaq: FRAN) with a Hold rating after the company boosted Q4 EPS expectations, as announced earlier in the session.

Analyst Richard Jaffe noted favorable holiday sales results than expected for Francesca's, commenting, A favorable consumer response to seasonal and Holiday offerings, across all channels has improved the 4Q earnings outlook. The company now expects 4Q comp sales to increase in the high-single digits versus a previously anticipated increase of mid-single digits.

On the firm's Hold rating: We believe that the improvement in comps, better inventory management, an increased investment in talent and systems and attractive store remodels will help profitability going forward. Additionally, the focus on omnichannel should contribute to sales growth. However, we believe that at the current share price, given the recent run up in the stock with shares trading at about 18x our 2016 EPS estimate above its two-year average of the out year multiple for the company of 14x, the reward is limited and risk, as always, remains significant, given the volatility of fashion apparel retailers, the vagaries of fashion, apparel trends, competitive challenges, and consumer preferences. We reiterate our Hold rating.

Updated estimates: Q4 EPS from $0.32 to $0.34, FY15 from $0.87 to $0.90, and FY16 from $1.00 up to $1.02.

For an analyst ratings summary and ratings history on Francesca\'s Holdings click here. For more ratings news on Francesca\'s Holdings click here.

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