UPDATE: KeyBanc Capital Markets Upgrades DSW to Buy on New Store, Margin Growth
KeyBanc Capital Markets raised its rating on DSW (NYSE: DSW) from Hold to Buy and established an $81 price target.
KeyBanc Capital Markets said, "Despite its premium valuation, we think DSW is well positioned to capture further gains. The Company has shown a strong ability to drive traffic and transactions despite difficult comparisons and a weak retail environment (with seven quarters of earnings beats). We now see additional levers to drive operating margins toward the 12% target, including a new vehicle for store growth and the likely rollout of higher-margin categories. When excluding DSW's strong cash balance of $7.42 per share, our price target implies a multiple of 18.6x 2013 P/E, vs. 15.5x its current stock price and 15.5x P/E for the big-box group. Operating margins of 12% would translate to a P/E of 14.8x."
DSW closed at $68.12 on Friday.
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