UPDATE: Sterne Agee CRT Downgrades Genesco (GCO) to Neutral

Sterne Agee CRT downgraded Genesco (NYSE: GCO) from Buy to Neutral with a price target of $72 (unchanged). Analyst Sam Poser is confident that the overall business is improving but he doesn't see further catalysts, and shares are near his price target.

"After taking Genesco Inc. CEO, Bob Dennis and CFO, Mimi Vaughn on the road in Boston last week, it's is clear to us that the Journeys and Johnston & Murphy (J&M) businesses are in very good shape, and Schuh is heading in the right direction. However, it will be difficult to judge if the efforts made to stabilize and potentially restart the growth of the Lids Locker Room business until the MLB playoffs in late 3Q. The price of the GCO stock is up ~23% this year and is within shouting distance of our prior $72 PT. GCO is currently is trading at a P/E of ~12X of our FY18 EPS estimate, which is in line with its 5-year average. Maintaining FY17/18 EPS estimates of $4.90/$5.74," said Poser.

"We are downgrading GCO from Buy to Neutral as the stock has virtually reached our prior price target of $72, and we do not see further catalysts in the near term. We are confident that the overall business is fundamentally improving. There is strength in the Journeys and J&M businesses, the Lids hat business appears to have stabilized, and the Schuh business should improve as some leverage from Journeys vendor relationships is used, and the promotional activity caused by the sale of a competitor, Office, eases. However, the Lids Locker Room, and Locker Room concepts are at an inflection point, and we are unlikely to get a clear view of progress until late October," added the analyst.

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

Shares of Genesco closed at $71.19 yesterday.

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