Brean Capital Starts Express With A Buy

In a research note out Tuesday, Brean Capital analyst Liz Pierce initiated coverage of Express Inc. EXPR with a Buy rating and $21 price target.

Pierce said, "Over the past couple of years, we believe EXPR's fashion DNA was compromised by some self-inflicted responses to the
competitive environment; however, beginning in Q4, the company began to course correct with a brand-right message consistent with its rich fashion legacy."

While Pierce looks for the competitive environment to remain challenging, she believes Express' curated and well-edited merchandise position combined with its flexible supply chain positions it to defend its turf.

Several reasons for the Buy Rating are noted:

• Brand message back on track
• Several initiatives in place to lift productivity
• Considerable upside growth potential for both online and international

Brean also believes there is no governor to limit operating margin expansion beyond 13 percent. "Accordingly, we are launching coverage with a Buy rating and a $21 target price; our TP is based on a multiple of 16.5x our FY16 EPS of $1.27and PEG ratio of 0.7."