Brean Capital's Buy Recommendation: HSN Is 'Crushing It'

In a report published Thursday, analysts at Brean Capital maintained their Buy rating on HSN, Inc. HSNI and the price target of $81. The company posted strong 1Q15 results, ahead of the analysts' expectations. The quarter marked the second straight quarter of sales growth in the double digits for the company, while the adjusted EBITDA expanded at a rate higher than the sales. The company also posted its EPS ahead of the estimates, as well as better than expected operating performance for Cornerstone. "While we can debate the sustainability of the double-digit sales growth, we believe there is no debating that HSN's core is as strong as it has ever been – with its mobile efforts driving younger and more affluent consumers to its sticky platform, data analytics efforts increasing the lifetime value of its consumers, and strength across all categories (except jewelry)," the analysts said. The revenue growth of 10.3 percent was impressive and well ahead of the estimates, driven by 7 percent growth in units shipped. EBITDA accelerated in tandem with sales during 1Q. "The (EBITDA) leverage was even more impressive when considering gross margin declined 44 basis points due to increases in inventory reserves tied to jewelry," the analysts added.