UPDATE: Goldman Sachs Downgrades Michael Kors (KORS) to Neutral

Goldman Sachs downgraded Michael Kors (NYSE: KORS) from Buy to Neutral with a price target of $50.00 (from $93.00). Analyst Lindsay Drucker Mann noted the deterioration since mid-February was an 'outlier' in retail, suggesting underlying brand weakness.

"The speed of deterioration since mid-February is an outlier vs. other retailers, and has shaken our confidence that KORS can comp positively in the US despite a favorable competitive backdrop and healthy handbag industry trends. With KORS trading at 10-11X the midpoint of guidance, the market is already braced for sharp earnings erosion; this seems appropriate to us in light of the lack of earnings visibility," said Drucker Mann.

"The March comp miss, while exacerbated by exogenous factors (watch sales declines, port delays, ecomm disruptions), can only be fully explained by underlying brand weakness that lacks an easy fix, is most likely persistent in nature, and for which it is difficult at this stage to pinpoint a bottom, particularly since management is not materially modifying its business strategy in response," continued the analyst.

Drucker Mann added, "In a draconian scenario, we pencil in $1.85 of EPS, which assumes US sales are cut in half and margins correct to COH levels. We lower FY16 EPS to $4.43 from $4.67, and reduce FY17/18 out-year EPS to $4.63/$4.90 from $5.37/$5.99, reflecting limited domestic growth going forward."

For an analyst ratings summary and ratings history on Michael Kors click here. For more ratings news on Michael Kors click here.

Shares of Michael Kors closed at $45.93 yesterday.

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