Wedbush Cuts Price Target on Zumiez, Inc. (ZUMZ) to $12; Remains Neutral
Wedbush maintained a Neutral rating on Zumiez, Inc. (NASDAQ: ZUMZ), and cut the price target to $12.00 (from $15.00), following the company's 1Q earnings report. May sales came in light of expectations, declining 7.6% versus consensus expectations for a 4.6% decline. 2Q comps were guided down 6%-8% (vs. consensus of down 2%), with EPS guided to $(0.09)-$(0.13), significantly below consensus of $0.06.
Analyst Morry Brown commented, "Executives remain focused on long-term, but near-term earnings outlook continues to erode. Following a tough 1Q16, ZUMZ guided down 2Q meaningfully and – assuming no material change in current trends – we expect consensus 2H16 EPS estimates are likely to see a similarly steep downward revision. From a long-term perspective, continued investments around e-commerce and future growth make sense. From a near-term earnings and stock narrative perspective, the pressure of persistently negative SSS declines coinciding with higher SG&A due to an investment year is driving EPS (and the stock price) lower. Absent a highly unexpected bounce in broader mall traffic, we see limited opportunity for upside to EPS in 2016, even after the significant earnings reset in response to 2Q guidance. This keeps us NEUTRAL."
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Shares of Zumiez, Inc. closed at $15.06 yesterday.