Wells Fargo Starts Steven Madden (SHOO) at Market Perform
Get Alerts SHOO Hot Sheet
Rating Summary:
10 Buy, 9 Hold, 2 Sell
Rating Trend: Down
Today's Overall Ratings:
Up: 11 | Down: 13 | New: 17
Join SI Premium – FREE
Wells Fargo initiates coverage on Steven Madden (NASDAQ: SHOO) with a Market Perform rating and $38-$40 valuation range.
Analyst Tom Nikic sees several reasons to like the story, including: 1) the core Steve Madden brand is solid (as are some of the other brands in the portfolio such as Dolce Vita); 2) the wholesale business may be poised to accelerate (potential convergence between tepid sell-in to retailers and strong out-the-door selling trends to consumers); 3) the supply chain is a key competitive advantage (industry-leading inventory turnover), in our view; 4) gross margin trends are favorable (channel mix, wholesale allowances, lean inventories); and 5) the management team is strong, in our opinion.
That said, rapidly decelerating retail comps (just +1.3% in Q3 vs. double-digit growth in 2015 and early-2016) may be a sign of decelerating demand trends for the brand (and potential channel conflict as wholesale improves). Plus, the company's gross margin tailwinds are largely being offset by SG&A deleverage (due to sluggish sales trends and retail expansion), so they do not envision meaningful operating margin expansion in the near to medium term. Furthermore, the stock currently trades at 18x FY2017E EPS and 10x EBITDA, so we struggle to envision multiple expansion from here.
For an analyst ratings summary and ratings history on Steven Madden click here. For more ratings news on Steven Madden click here.
Shares of Steven Madden closed at $38.65 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Maxim Group Starts The Lovesac Co. (LOVE) at Buy
- Atos SE (ATO:FP) (AEXAY) PT Lowered to EUR1.70 at CFRA
- Wells Fargo Reiterates Equal Weight Rating on UnitedHealth Group (UNH)
Create E-mail Alert Related Categories
Analyst Comments, New CoverageRelated Entities
Wells FargoSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!