Jefferies Trims PT on Quicksilver (ZQK) 20% to $4 into Q4 Numbers; Says Even Strong Europe Results Not Enough
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Price: $0.46 --0%
Rating Summary:
1 Buy, 10 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
1 Buy, 10 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Heading into fourth-quarter earnings, Jefferies trimmed its price target on Quicksilver (NYSE: ZQK) by 20 percent, from $5 to $4, while keeping a Buy rating on the shares.
Jefferies sees Quicksilver as a high-risk/high-reward play with great long-term prospects. Quicksilver gets 50 percent of sales and 65 percent of profits from outside of the U.S.
However, cases for long-term top-line growth and margin expansion are leveraged to places like Europe, which is currently struggling to work out its debt issues. Jefferies comments, "The company is also highly levered but is generating a HSD% FCF yield with no major debt maturities until 2015. Finally, a sub $5 share price and sub $1 billion market cap make ZQK a very volatile stock."
Overall, Quicksilver should have positive momentum based on recent data points from peers PacSun (Nasdaq: PSUN) and Zumiez (Nasdaq: ZUMZ). For its International segment, Jefferies says the trend is not as clear. Quicksilver has 7 percent exposure to Spain alone, and investors might be approaching companies having heavy European exposure with caution. Even the best case scenario, with Europe outperforming in the quarter, may not be enough to move stocks.
Potential catalysts aside from earnings include Quicksilver presenting at ICR Xchange in the week of January 9th, and updating on its previously announced five-year plan.
Jefferies is modeling for earnings of 5 cents, which is down from 8 cents prior.
For an analyst ratings summary and ratings history on Quiksilver click here. For more ratings news on Quiksilver click here.
Shares of Quiksilver closed at $3.17 yesterday.
Jefferies sees Quicksilver as a high-risk/high-reward play with great long-term prospects. Quicksilver gets 50 percent of sales and 65 percent of profits from outside of the U.S.
However, cases for long-term top-line growth and margin expansion are leveraged to places like Europe, which is currently struggling to work out its debt issues. Jefferies comments, "The company is also highly levered but is generating a HSD% FCF yield with no major debt maturities until 2015. Finally, a sub $5 share price and sub $1 billion market cap make ZQK a very volatile stock."
Overall, Quicksilver should have positive momentum based on recent data points from peers PacSun (Nasdaq: PSUN) and Zumiez (Nasdaq: ZUMZ). For its International segment, Jefferies says the trend is not as clear. Quicksilver has 7 percent exposure to Spain alone, and investors might be approaching companies having heavy European exposure with caution. Even the best case scenario, with Europe outperforming in the quarter, may not be enough to move stocks.
Potential catalysts aside from earnings include Quicksilver presenting at ICR Xchange in the week of January 9th, and updating on its previously announced five-year plan.
Jefferies is modeling for earnings of 5 cents, which is down from 8 cents prior.
For an analyst ratings summary and ratings history on Quiksilver click here. For more ratings news on Quiksilver click here.
Shares of Quiksilver closed at $3.17 yesterday.
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