Canaccord Genuity maintained a Hold rating on Michael Kors (NYSE: KORS), and cut the price target to $37.00 (from $45.00), ahead of the company's 2Q16 earnings results. Analyst Camilo Lyon believes that the brand continues to struggle to regain the allure it once had. When KORS reports fiscal Q2 results on Wednesday, November 4 BMO, Cannaccord is anticipating little in the way of evidence of improved momentum.

Lyon commented, "We are lowering our price target on KORS to $37 from $45 as we believe the brand continues to struggle to regain the allure it once had. When KORS reports fiscal Q2 results on Wednesday, November 4 BMO, we are anticipating little in the way of evidence of improved momentum (we are modeling EPS of 89c vs. consensus at 90c). We believe comps remained in the negative HSD range (we're modeling -8%) as pressures from weak NA traffic trends, a trend shift to smaller handbags (ASP pressure), and FX headwinds did not abate. In addition, we expect further deterioration in the NA wholesale channel to materialize, as conversations with our industry contacts indicate inventories have been building. In our opinion, the issue remains one of over-distribution compounded by a lack of innovation, thus resulting in consumer disinterest. While valuation appears inexpensive, we believe the stock will have a difficult time moving higher when to us, 2017 estimates look far too high. As such, we maintain our cautious stance until we begin to see a turn in the business, and lower our PT to $37."

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Shares of Michael Kors closed at $38.96 yesterday.