G-III Apparel (GIII) PT Raised to $30 at Telsey

Telsey analyst Dana Telsey raised the price target on G-III Apparel (NASDAQ: GIII) to $30.00 (from $27.00) while maintaining a Market Perform rating.

The analyst commented: "Maintain Market Perform rating. Reducing price target to $27. GIII had a decent start to the year, with sales coming in slightly better than expected, with double-digit growth from DKNY, Karl Lagerfeld, and Donna Karan. Encouragingly, these owned brands offset the revenue gaps from CK and Tommy Hilfiger. The first quarter's expense deleverage and other income were also favorable, driving the EPS beat. However, the Q2 outlook fell short of prior expectations on both the top and bottom lines reflecting supply chain challenges and the timing of shipments. Additionally, GIII withdrew its full year earnings guidance, while maintaining its topline outlook. We believe management continues to expect momentum across its owned brands, particularly given the full year revenue reiteration. However, the tariffs are relatively fluid and there's limited visibility into the macro environment and how consumer demand for discretionary products will be impacted in the back half of the year. We do believe that GIII's seasoned management team is well suited to navigate the uncertain environment, but the near-term will likely be challenging. We remain encouraged by GIII’s efforts to increase its higher margin owned-brand exposure, grow its DTC penetration, and strengthen its owned brand portfolio. While the expansion of the DK brand, growth of Karl Lagerfeld, as well as the Nautica, Halston, Champion, and Converse licensing agreements can help offset the losses while improving visibility, and its AWWG partnership can fuel European growth, we see continued pressure from the still challenging macro environment and choppy wholesale channel. As such, we maintain our Market Perform rating. However, on our moderated estimates, we are lowering our price target to $27 from $30, which assumes a 7.7x multiple on our two-year forward EPS estimate of $3.50, roughly in-line with the two-year average NTM multiple of 7.5x."

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