Telsey Advisory Ups Steven Madden To Outperform Amid 'Improved Fashion Trends'

• Steven Madden, Ltd. SHOO has seen a 14.4 percent decline in its share price in the past three months, from the high of $43.86 on July 14.
• Telsey’s Kelly Chen has upgraded the rating on Steven Madden to Outperform, while raising the price target from $43 to $44.
• Chen expects the company’s EPS to turn positive in 2H15, driven by continuing traction in retail fashion trends, along with a recovery in wholesale.

While 2014 was a difficult year for the company due to unfavorable weather only adding to the lack of fashion trends, a recovery in trends began to emerge in early 2015, with the company posting meaningfully higher than expected comps, although its EPS still remained pressured in 1H15.

“Coming out of 2Q15, we felt as though SHOO was righting the ship and could see the potential on the horizon. However, the stock seemed to be reflecting much of that improvement,” Chen said.

With the recent pullback in the stock, Chen believes that it offers an entry point “ahead of the potential earnings inflection and during the early stages of a fashion-led improvement.”

Chen believes that the company is already outperforming its peers and that its business models positions Steven Madden better than its competitors during times of uncertainty.