Kate Spade (KATE) Sell-Off a Buying Opportunity, Nomura Says

Nomura Securities analyst Simeon Siegel cut his price target on Kate Spade (NYSE: KATE) to $38.00 (from $43.00) but maintained a Buy rating.

"With high flyer growth stories beginning to feel pressure of the promotional environment, investors are growing concerned over oversaturation," Siegel comments. "However, we don’t believe this means they're over, they simply need a recalibration of gross margin expectations. And with 30% comps, the demand for KATE is clear. With 52mn shares traded today (~41% of outstanding) and a clear cycling of the investor base, we believe this is the oppt'y many investors have been waiting for and we see this as a great chance to buy into the story. We believe KATE’s path to margin expansion lies in improving its expense profile, rather than through GM’s."

The firm maintained FY14E EPS at $0.30; FY15E EPS at $0.66.

For an analyst ratings summary and ratings history on Kate Spade click here. For more ratings news on Kate Spade click here.

Shares of Kate Spade closed at $29.00 yesterday.

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