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Standpoint ResearchFounder and Director of Research Ronnie Moas recently downgraded Guess?, Inc. GES from Buy to Hold.
- The main reason behind the downgrade is Moas’ belief that the shares are –currently- fairly valued.
- Shares of Guess are up more than two percent on Tuesday trading.
The expert notes that shares of Guess have surged roughly 35 percent since the beginning of May, hitting a 52-week high on Tuesday. Trading at 22 times the 2016 earnings estimate – and 21 times the trailing twelve months earnings, the shares seem fairly valued, he adds.
Moas also points out that, while there is no revenue growth, the company does offer a 4 percent dividend yield -- and has 23 percent of its $2 billion market cap in cash with no debt. However, the expert explains he can no longer maintain a Buy rating on this name due to the recent absolute and relative (to the S&P) rise.
A Closer Look
Guess? was Moas’ recommendation from August 2014. He is now exiting the name “with no absolute or relative gain/loss.” He highlights, nonetheless, that the current situation is worse than what it was at the time he made the original recommendation a year ago, so exiting at break-even seems reasonable.
Moas concludes, since two other research firms boosted their price targets for Guess? On Tuesday morning, driving the shares up, he would sell into this strength.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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