Wunderlich Reiterates Bullish Stance On Vera Bradley Despite 'Near-Term Issues'

Wunderlich maintains its bullish thesis on Vera Bradley, Inc. VRA, despite expecting weak third-quarter results on December 7 after the recent data breach at the company.

Lingering Data Breach Concerns

Analyst Eric Beder trimmed his third-quarter EPS projection to $0.18 (from $0.24) and lowered his comps view to -6 percent, saying the company's data breach hit third-quarter revenue and costs.

“We note the breach was announced on October 12, but affected results from July to September. Frankly, we do not know the overall damage of this breach in terms of costs or its ability to deter shoppers from buying from Vera Bradley but do not see how it could be a positive,” Beder wrote in a note.

The analyst is also skeptical of the impact of the breach on the fourth quarter and continues to assume comps begin to turn positive with the company celebrating the anniversary of the shift in online discounting and further new products working for the holidays.

Rating Justification

Against this backdrop, Beder maintains his Buy rating and $20 price target on Vera Bradley shares.

“[W]e believe the new logo and continued shift in product mix, plus a deepening focus by the entire handbag segment on higher returns, should allow Vera to begin to shine going forward,” Beder added.

Shares of Vera Bradley closed Friday’s trading at $14.07.