Benchmark Downgrades True Religion Apparel (TRLG) to Hold; Cutting Estimates & PT After Q4 Miss

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TRLG Hot Sheet

Rating Summary:
5 Buy, 4 Hold, 1 Sell

Rating Trend:

Up

Today's Overall Ratings:
Up: 16 | Down: 7 | New: 22

Benchmark downgraded True Religion Apparel (NASDAQ: TRLG) from Buy to Hold with a price target cut from $43 to $38.

Benchmark analyst says, "We do not believe True Religion has a revenue problem; we believe it has a spending problem. TRLG has demand for its products and has intentionally held back revenues to protect the brand. Last year, it greatly reduced revenue from the US off price channel. In 2012, it is cutting back on sales to Korea and some boutiques. While we believe it is right to defend the brand, we rarely see the company cut back on spending. In 2008, the company achieved $1.84 in EPS on $270 million in revenue. In 2011, the company earned $0.04 less in EPS on 56% more revenue. We reduced our FY12 EPS estimate to $1.92, from $2.25, and initiated 2013 at $2.10."

"Given the strong balance sheet and earnings potential, we would like to be more aggressive on the name. But, we have moved to the sidelines until we become comfortable that at some point operating margin expansion and leverage could be achieved."

For an analyst ratings summary and ratings history on True Religion Apparel click here. For more ratings news on True Religion Apparel click here.

Shares of True Religion Apparel closed at $36.74 yesterday, with a 52 week range of $20.49-$37.82.

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