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In a report published Monday, BMO Capital Markets analyst Karen Short reiterated an Outperform rating on GNC Holdings
, and raised the price target from $46.00 to $50.00.
In the report, Short noted, “Given our upwardly revised EPS in 2H13 and FY14, we are raising our price target to $50 and maintaining our Outperform rating. Our positive thesis is based on the following: 1) valuation is still very reasonable – currently trading at a FY14 EV/EBITDAR of 8.0x, and a P/E of 13.4x; 2) on a lease-adjusted basis, ROIC is the highest in our coverage universe; 3) GNC screens extremely well on EV/EBITDAR relative to ROIC – especially when we factor in the top line growth (ranking #2 out of 17 stocks in our universe); 4) as the new Member Pricing program takes hold (rolled out to 3,000 stores in early May), traffic should become a more meaningful component of the comp – and this ‘healthier' comp (because the comp will consist of share gains) will warrant multiple expansion; and 5) we believe 2H13 EPS guidance could be conservative. Separately, we believe GNC is uniquely positioned to leverage data from its loyalty card, and more tailored and targeted promotions should also contribute to traffic momentum.”
GNC Holdings closed on Friday at $44.85.
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