FBR Capital Cuts Price Target on Francesca's (FRAN) to $12 Following 1Q Report

FBR Capital maintained a Market Perform rating on Francesca's Holdings (NASDAQ: FRAN), and cut the price target to $12.00 (from $19.00), following the company's 1Q earnings report. FRAN reported EPS of $0.18, coming in ahead the consensus estimate of $0.17.

Analyst Susan Anderson commented, "FRAN reported 1Q EPS of $0.18, versus FBR/consensus of $0.19/$0.17 (see earlier note for 1Q details and guidance). While FRAN maintained its positive comp trend in 1Q, management guided 2Q comps to decline –MSD, which we believe is reflective of declining mall traffic and could prove to be conservative if better traffic trends continue. Management also indicated SG&A margin will de-lever significantly for the remainder of 2016 due to omni-channel investments, incentives, marketing expenses, new management compensation, and the impact of new boutiques. Interim CEO and President of the Board Richard Kunes, new CFO Kelly Dilts, and CMO Laurie Hummel (who joined FRAN in November 2015) led the call and reiterated FRAN's commitment to its Vision 2020 strategy, which was put in place by the former CEO Mike Barnes. We like FRAN's initiatives; however, we remain on the sidelines and look for increased visibility regarding mall traffic, omni-channel capabilities, strategic investments, and consistent comp performance. Reflective of near-term pressure, declining margins, and management's decreased guidance, we adjust our P/E multiple to 12x from 17x and our price target to $12 from $19."

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

Shares of Francesca\'s Holdings closed at $10.63 yesterday.

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