Express Inc. (EXPR) Isn't Broken, Says Goldman Sachs
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Price: $0.83 --0%
Rating Summary:
7 Buy, 9 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 9
Rating Summary:
7 Buy, 9 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 9
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Goldman Sachs maintained a Buy rating on Express Inc. (NYSE: EXPR) and reduced its price target to $20.00 (from $23.00). In the view of analyst Lindsay Drucker Mann, the stock isn't "broken."
"Our takeaways from the quarter are on balance negative, and we lower FY14 EPS to $1.23 from $1.70 to reflect 1Q demand softness, higher rent inflation, and less near-term benefit from growth initiatives like flagships. We reduce FY15 by a lesser magnitude to $1.49 from $1.81, as 1Q15 laps weather-driven weakness," said Drucker Mann.
"Having digested the bad news, we ultimately believe EXPR is under-earning relative to its potential, supporting a bullish forward outlook on shares: (1) Composition of 1Q guidance is better than we feared considering external pressures – Comp guidance is relatively consistent with what we’ve heard from competitors, but the outlook for improving merchandise margins is actually better. Inventories also appear clean. These factors give us comfort in a path forward as weather and the macro improve. (2) Returns yet to come on strategic initiatives – Significant investments in flagships, marketing, and IT have yet to deliver on their potential, and add upside risk to our base case for sales. (3) Positive exposure to US consumer recovery theme – We expect EXPR will benefit as consumer spending accelerates alongside diminishing fiscal drag in FY15," she added.
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 $16.05 yesterday.
"Our takeaways from the quarter are on balance negative, and we lower FY14 EPS to $1.23 from $1.70 to reflect 1Q demand softness, higher rent inflation, and less near-term benefit from growth initiatives like flagships. We reduce FY15 by a lesser magnitude to $1.49 from $1.81, as 1Q15 laps weather-driven weakness," said Drucker Mann.
"Having digested the bad news, we ultimately believe EXPR is under-earning relative to its potential, supporting a bullish forward outlook on shares: (1) Composition of 1Q guidance is better than we feared considering external pressures – Comp guidance is relatively consistent with what we’ve heard from competitors, but the outlook for improving merchandise margins is actually better. Inventories also appear clean. These factors give us comfort in a path forward as weather and the macro improve. (2) Returns yet to come on strategic initiatives – Significant investments in flagships, marketing, and IT have yet to deliver on their potential, and add upside risk to our base case for sales. (3) Positive exposure to US consumer recovery theme – We expect EXPR will benefit as consumer spending accelerates alongside diminishing fiscal drag in FY15," she added.
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 $16.05 yesterday.
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