Duluth Holdings Price Target Up To $35 At BMO Capital

BMO Capital raised its estimates and price target on Duluth Holdings Inc DLTH after the company's second quarter EPS of $0.11 beat the brokerage's estimate by $0.04.

The EPS beat was attributed to sales growth of 27.4 percent versus BMO estimate of 21.8 percent, driven equally by solid DTC and retail growth. Duluth increased its store openings planned for CY2016 to seven stores on a base of nine and still expects to open an additional 7-8 next year.

"We continue to believe that DLTH has ample runway to drive additional sales growth ahead of schedule through ahead-of-plan store openings," analyst John Morris wrote in a note.

Further, Morris said the under-penetrated Women's apparel segment should expand margins and direct channel uplift in future quarters, driven by the positive response to the marketing initiatives.

"We expect Duluth's women's business to grow to slightly over 20% of revenue in 2016," Morris elaborated.

The company maintained its 2016 outlook that calls for EPS of $0.66-$0.70 and net sales of $370-$380 million.

Morris, who maintained his Outperform rating, raised his full-year 2016 EPS estimate $0.71 from $0.68 and revenue view to $381 million from $378 million. The analyst also raised his price target to $35 from $28.

At time of writing, shares of Duluth Holdings were up 0.58 percent to $29.33.