Goldman Sachs' upgrandes GNC GNC from "Neutral" to "Buy" and Increases Price Target to $49 from $44.
These are Goldman Sachs' Notes:
- GNC’s new CEO Mike Archbold possesses a track record of gross margin and SG&A discipline from stints at prior employers that suggest he can execute against these imperatives.
- Inventory growth has outpaced sales growth in all but two quarters since 2012. GNC will begin
- to correct this issue with production cuts beginning in 4Q14, as it tolerates downtime in its manufacturing facilities but
- cleans up its supply chain in the process.
- We believe there is valuation upside for a strong brand managed to a consistent growth algorithm.
- Growing international franchise footprint.
- Relative to mature retailers with similar sales and EPS growth profiles, GNC’s valuation screens attractively.
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