Piper Jaffray Downgrades Iconix Brand Group (ICON) to Neutral
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Piper Jaffray & Co. downgrades Iconix Brand Group (Nasdaq: ICON) from Buy to Neutral.
Piper analyst says, "Results ahead of expectations; resilient model in current environment: Revenues were up 29%, including new brand contributions from the Pillowtex and Starter acquisitions in December of 2007. Based on expected future revenue for these brands when acquired ($54M/yr) and assuming consistent revenue throughout the year implies $13.5M/qtr, greater than the $12.5M gain in FQ3 leading us to believe organic revenue growth was negative in the quarter, consistent with comp store sales to date for apparel at our mass merchants under coverage...While organic revenue growth may have been negative, the company still delivered solid FCF in the quarter, approx. $32M, +13% y/y. SG&A growth outstripped revenue growth for the fifth consecutive quarter and we remain concerned about this trend as the company plans to ramp up marketing expenditures in FY09 (+30%) to support new direct-to-retail relationships."
Iconix Brand Group, Inc. (Iconix) is a brand management company engaged in licensing, marketing and providing trend direction for a portfolio of owned consumer brands.
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