UPDATE: Piper Jaffray Raises PT on The Wet Seal Following Consumer Conference
In a report published Tuesday, Piper Jaffray analyst Stephanie S. Wissink reiterated a Neutral rating on The Wet Seal (NASDAQ: WTSL), and raised the price target from $4.50 to $5.50.
In the report, Piper Jaffray noted, “Following a hosted meeting with WTSL management at our Consumer Conference last week and a more thorough review of the operating model, we have increased optimism with respect to an accelerated margin recovery timeline. We think a mid-single digit operating margin over the next 2-3 years is reasonable (vs. 3.6% est. in 2014) and will be driven by a combination of sales stability, merchandise margin improvement, and cost leverage. Management hinted at a return to growth, should the business stabilize however, we are cautious on store growth expectations in the current environment where traffic volatility and channel shift are challenging traditional growth strategies. As such, we think a recovery (only) multiple is warranted. On slightly revised estimates and a 1.0x higher EBITDA multiple turn, our PT moves from $4.50 to $5.50.”
The Wet Seal closed on Monday at $4.84.
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