Michael Kors Sinks On Margin Worries As Contrarian Analyst Touts Rating
Michael Kors (NYSE: KORS) plunged Monday on margin worries, prompting a contrarian analyst to tout his Buy recommendation.
Bank of America's Robert F. Ohmes reiterated his rating and $120 target. "We see the price pull back today as a particularly attractive opportunity," Ohmes said in a note.
Kors said earlier on Monday that its first-quarter gross margin narrowed in the fiscal first quarter because of discounting and will be down a further 0.5 percent in the current period.
Kors shares were hammered in June when Barclays and Citigroup said the company had doubled the amount of space in its stores devoted to discounted merchandise.
Ohmes said he had predicted that second-quarter gross margin would narrow by 0.8 percent from a year earlier, when margins were "very strong."
The company's first-quarter revenue growth of 43 percent and its same-store sales gain of 24 percent won plaudits from Ohmes.
Plans for new product lines, a re-launch of Internet sales and a growing number of stores should enable the company's "impressive brand momentum to continue," Ohmes said.
Shares traded recently at $76.34, down 6.7 percent.
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