UPDATE: Citigroup Initiates Coverage on DSW with Neutral Rating, $71 PT
In a report published Friday, Citigroup initiated coverage on DSW (NYSE: DSW) with a Neutral rating and $71.00 price target.
Citigroup noted, “We think there are many positive investment considerations to DSW's story including: 1) a strong square footage growth story, 2) participation in a strong footwear cycle, 3) a differentiated retail model, and 4) a strong management team. However, in order to get to enough upside in the stock to justify a Buy rating, we would need to be assuming an aggressive multiple of >20x, even with our more aggressive EPS estimates (higher than consensus by $0.07 in FY13 and $0.06 in FY14). Currently the stock is trading at 17.4x, or a 7% premium to its 3-year average and a 19% premium to peers. We are applying an 18.5x multiple to reach our target of $71.”
DSW closed on Thursday at $63.62.
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