Quiksilver (ZQK) Nearing Inflection - Goldman Sachs
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Price: $0.46 --0%
Rating Summary:
1 Buy, 10 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 11 | New: 49
Rating Summary:
1 Buy, 10 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 11 | New: 49
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Goldman Sachs reiterated a Buy rating on Quiksilver (NYSE: ZQK) with a price target of $9.50. Analyst Taposh Bari called Q1 results the calm before the storm, and he sees an inflection point on the horizon.
"1Q14 (Jan) results resembled the same composition we've seen over the past 12 months: weak sales, aggressive SG&A management and gross margin stabilization. ZQK technically “missed” consensus ($0.10 loss versus $0.06 expectations), but a lack of guidance and volatility around tax rate makes this metric irrelevant, in our opinion. Looking beyond the headlines, there were several signs of progress along management’s profit improvement plan: *+2% store SSS growth with gains in the Americas and European regions *inventories down 10% yoy, the steepest decline in nearly four years *constant FX sales declines of 1.8% (versus -6% in 2013) *+5% constant FX sales growth at the Roxy brand," said Bari.
"Management reiterated its plan for a fundamental inflection later this year as new selling, sourcing, marketing, and design processes become apparent. While the pace of progress continues to be difficult to evaluate, the aforementioned observations leave us constructive on the stock. While due largely to comparisons (due to the anniversary of last year's SAP implementation issues in Europe), next quarter should mark the start of ZQK's period of gross profit acceleration," he added.
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 $7.69 yesterday.
"1Q14 (Jan) results resembled the same composition we've seen over the past 12 months: weak sales, aggressive SG&A management and gross margin stabilization. ZQK technically “missed” consensus ($0.10 loss versus $0.06 expectations), but a lack of guidance and volatility around tax rate makes this metric irrelevant, in our opinion. Looking beyond the headlines, there were several signs of progress along management’s profit improvement plan: *+2% store SSS growth with gains in the Americas and European regions *inventories down 10% yoy, the steepest decline in nearly four years *constant FX sales declines of 1.8% (versus -6% in 2013) *+5% constant FX sales growth at the Roxy brand," said Bari.
"Management reiterated its plan for a fundamental inflection later this year as new selling, sourcing, marketing, and design processes become apparent. While the pace of progress continues to be difficult to evaluate, the aforementioned observations leave us constructive on the stock. While due largely to comparisons (due to the anniversary of last year's SAP implementation issues in Europe), next quarter should mark the start of ZQK's period of gross profit acceleration," he added.
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 $7.69 yesterday.
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