UPDATE: Canaccord Genuity Reiterates on Francesca's Holdings as Pullback Provides Long-Term Buying Opportunity
In a report published Thursday, Canaccord Genuity analyst Laura Champine reiterated a Buy rating on Francesca's Holdings (NASDAQ: FRAN), but lowered the price target from $35.00 to $30.00.
In the report, Canaccord Genuity noted, “FRAN's Q3 EPS of $0.20 was $0.02 below our estimate and in line with consensus. The SG&A expense rate was 140bps above our estimate, reflecting higher payroll related to the company's expanded managerial personnel in stores. A higher interest expense reduced EPS by a penny versus our estimate. Shares have come under pressure after the company commented that November sales fell below expectations, particularly during the final week, and reduced its Q4 outlook. Retail store traffic continues to weaken, and FRAN guided for a Q4 SSS decline of 3% to 8% on top of +9.2%. The company reduced its Q4 EPS guidance by $0.07 at the midpoint of its previous implied range to $0.25-$0.29. Prior consensus was $0.34. We do not think FRAN's growth potential is priced in with shares trading at 12x our FY14 EPS estimate and 7x FY14E EV/EBITDA.”
Francesca's Holdings closed on Wednesday at $16.36.
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