UPDATE: B.Riley Starts Rocky Brands (RCKY) at Buy
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B.Riley analyst Susan Anderson initiates coverage on Rocky Brands (NASDAQ: RCKY) with a Buy rating and a price target of $60.00.
The analyst comments "We believe RCKY has significant upside potential from the Honeywell acquisition (Muck and XTRATUF brands), e-commerce growth, strong work boot demand, increasing profitability from higher-margin channels, and strong trends in outdoor footwear. We estimate that the recent Muck and XTRATUF acquisition will add $0.80/share to annual earnings, including $0.60/share in FY21, and expect growth over the next several years driven by supply chain and cost synergies, as well as revenue synergies as RCKY cross-sells the brands among wholesalers. RCKY is currently trading at 9.7x our FY22 EPS estimate and at 13.0x the single Street estimate, which we believe does not account for the recent acquisition from Honeywell. This compares to RCKY’s fiveyear historical average FY2 P/E of 13.1x and peers at 14.7x. We base our $60 PT on 12.8x our FY22 EPS estimate, which we believe is appropriate and could prove conservative as RCKY's EBIT margin moves closer to peers' low-teens EBIT margin, as the Honeywell acquisition drives upside through synergies, and with continued strong growth from the work boot and outdoor categories and from the e-commerce channel."
Shares of Rocky Brands closed at $43.60 yesterday.
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