Deutsche Bank Downgrades Express Inc. (EXPR) to Hold

Deutsche Bank earlier downgraded Express Inc. (NYSE: EXPR) from Buy to Hold with a price target of $12.00 (from $19.00). The change follows the release of disappointing Q2 results.

Analyst Paul Trussell commented on the downgrade, saying, "EXPR diverged from the pack in 2Q as the company was unable to take advantage of an improved mall apparel backdrop, in our view, reporting a deeply underwhelming comp (-8% vs. DB -3%) and GPM (108 bps worse than our forecast). With 3Q and revised FY guidance suggesting a prolonged slump as the company tackles its unfocused assortment and works to flow through IT investments in order to achieve GPM benefit, we are stepping to the sidelines, especially as we are skeptical of management’s implied 4Q margin pick-up (i.e. less negative). We reduce our rating to Hold (from Buy) and our PT to $12 (from $19) as we prefer to wait out this storm and monitor progress along traffic and margin enhancement initiatives as well as store rationalization efforts. Until we can spot firm signs of trend-driven sales lift with inventory discipline and lower expenses, we are modeling flattish EPS growth in FY17 on -LSD comp to assume stabilization but not share gains."

For an analyst ratings summary and ratings history on Express Inc. click here. For more ratings news on Express Inc. click here.

Shares of Express Inc. closed at $16.03 yesterday.

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