Piper Jaffray Remains Bullish on Sequential Brands (SQBG) as ICON Trades Down
Piper Jaffray reiterated an Overweight rating and $21.00 price target on Sequential Brands (NASDAQ: SQBG) as shares trade down along side Iconix Brand Group, Inc. (NASDAQ: ICON). ICON pre-announced negative results last night, and has also been asked to review/restate past financial statements for accuracy. However, even though SQBG and ICON have similar business models, Analyst Erinn Murphy believes that SQBG has a superior platform, a strong management team that is well-liked in the industry, and a discipline around managing brands once on the platform.
Murphy commented, "Shares of SQBG are trading down in sympathy today with ICON (non-covered) which not only pre-announced negative last night but also has been asked to review/restate past financial statements for accuracy. While we recognize that SQBG and ICON have similar business models and they are the only dedicated publicly traded companies in the licensed brand management space, the brand platforms, assumptions around organic growth, & growth strategies are starkly different. Simply stated: we think SQBG has a better platform of brands growing HSD/LDD organically vs. negative organic growth at ICON. It is taking share in the industry on the deal front, acquiring better growth assets (Jessica Simpson, pending MSO). SQBG does not engage with int'l JVs which ICON in the past used to inflate revenue recognition, in our view. SQBG has superior corporate governance. We remain buyers on SQBG and see a tangible positive catalyst before YE with the closing of MSO."
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Shares of Sequential Brands closed at $11.86 yesterday.