At Home Group Started Neutral At Goldman Sachs

Goldman Sachs’ Matthew J. Fassler called At Home Group Inc HOME a “unique growth retail concept.”

Fassler initiated coverage of the company with a Neutral rating and price target of $17.

Unique Concept

The analyst believes the business concept “blends fast-fashion and home with unusually broad and deep assortments, delivers on consumers’ desire for value, and is well-positioned to capitalize on emerging real estate opportunities as other retailers consolidate their store footprints.”

Related Link: At Home Group's Risk/Reward Is Balanced, Says Morgan Stanley

However, Fassler also expressed caution regarding the recent choppy sector trends, At Home’s low financial returns, high leverage and risk from competition, ecommerce and development costs for the site.

Core Growth Drivers

On the other hand, the analyst also pointed out some core growth drivers for the company, especially for new units, as At Home expands its footprint from the current 115 locations to its target of 600 stores at 20 percent annual growth, with modest contribution from LSD same store sales.

“We model EBITDA growth in the mid-teens to mid-twenties over the next three years on gross margins expansion and fixed cost leverage in addition to cycling recent expenses from investments,” Fassler stated.

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