4 Footwear Stocks Morgan Stanley Is Watching

In a report issued Wednesday, analysts Jay Sole and Joseph Wyatt of Morgan Stanley provided an update on earnings estimates and post-earnings price targets for four branded apparel and footwear stocks: Deckers Outdoor Corp DECK, Genesco Inc. GCO, Caleres Inc CAL, and Express, Inc. EXPR.

According to the note, Caleres and Express likely have “near-term stock price momentum due to improving fundamentals and rising Street estimates.”

In Genesco’s case, they see 2015 as a transition year, but still think there is potential for 2016.

Finally, Deckers “remains a show-me story” for the firm.

Caleres

After reporting another beat and raise in the last quarter, Caleres remains strong. Although Morgan Stanley maintains an Equal-Weight rating, they see a favorable risk/reward profile and plenty of upside left (highlighting the fall analyst day as a probable catalyst).

Consequently, the analysts boosted their earnings estimates for fiscal 2015 and price target by 5 percent to $1.94 per share and $29, respectively.

Genesco

While the company’s latest quarter was disappointing, the analysts still see Genesco as “a potential 2016 story,” and thus maintain their Equal-Weight rating. They note that “FY16 is a transition year for Lids, but GCO's Lids strategy remains compelling and the division could rebound strongly in FY17 (CY16).”

However, the specialists trimmed their FY16 EPS estimate to $4.80, and their price target to $74.

Deckers

Deckers’ latest quarter was also disappointing to a certain measure – especially the 20 percent decline in “core classic UGG styles backlog.” However, with some positives counterbalancing this negative, Morgan Stanley remains Equal-Weight.

Their FY16 EPS estimate is unchanged at $5.09, in line with the company’s guidance. The price target also remained untouched at $82.

Express

Finally, Express managed to beat expectations last quarter. The analysts explain that “reduced promotional activity drove surprisingly strong 1Q y/y gross margin improvement.” Therefore, they increased their FY15 EPS estimate to $1.15, on the high-end of the management’s guidance, and their price target to $17.

Nonetheless, the stock remains Equal-Weight rated as the firm’s estimates are just in line with consensus, and valuation seems fair to them.