Goldman Sachs: Party City Just A 'Neutral,' Valuation Isn't Overly Exciting

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In a report published Tuesday, Goldman Sachs analysts initiated coverage of Party City Holdco, Inc. PRTY with a Neutral rating and a price target of $23.

"The bottom line is that PRTY is a unique vertically integrated retailer with a competitive moat, consistent fundamentals, and a tangible margin expansion story. At the same time, PRTY plans to de-lever the balance sheet, amplifying EPS growth," the analysts said.

According to the Goldman Sachs report, Party City is a market leader with consistent fundamentals in a fragmented industry that has high entry barriers. The company also has organic sales opportunity in both retail and wholesale, domestically and internationally, bolstered by potential future bolt-on M&A.

The analysts also believe that the company is a "[s]ignificant margin expansion story as share of shelf and percent manufactured grows over time." However, all these dynamics seem to be already priced into the stock, which is currently trading at a premium to its peers. The analysts prefer to wait for a more attractive entry point to this stock.

Posted In: Analyst ColorInitiationAnalyst RatingsGoldman Sachs
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