UPDATE: Stifel Downgrades G-III Apparel (GIII) to Sell
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(Updated - August 31, 2016 9:24 AM EDT)
Stifel downgraded G-III Apparel (NASDAQ: GIII) from Hold to Sell with a price target of $28. Analyst Jim Duffy said valuation doesn’t compensate for risks, despite a sell-off in shares.
"Despite the sell-off in shares, at the current valuation, we don’t believe shareholders are being adequately compensated for risks including among others: 1) concentration with structurally challenged distribution channels, 2) growing complexity and execution risk (including aggressive assumptions the DKI acquisition), and 3) higher than appreciated pro-forma leverage (inclusive of capitalized lease obligations, 3.8X). Our 12 mos. target price of represents a 7.3X TEV multiple on 2018 pro-forma EBITDA. Given the leverage and dependence on licensed brand rights for earnings power, we view this multiple as appropriate," said Duffy.
Shares of G-III Apparel closed at $33.14 yesterday.
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