Analyst: Sale Is 'Likely'
Ike Boruchow of Wells Fargo believes that Kate Spade will be able to attract a buyer for several reasons:
- Kate Spade's brand remains "relatively healthy" and is actually gaining share in the luxury goods segment.
- The company has a "meaningful opportunity to expand its wholesale distribution which has been a relative outperform without the need of increased promotional activity."
- Margins remain 5 to 7 points below its peers and can rise higher.
- The stock's multiple remains "compelling" even after Thursday's more than 10 percent gain.
Bottom line, Boruchow suggested that Kate Spade's holiday results which were also reported on Thursday prove that the brand "has plenty of runway on the topline," and the brand is powerful enough to generate ample synergies for multi-national buyers. As such the analyst sees "a potential sale catalyst as increasingly likely."
Shares remain Outperform rated with a valuation range per share boosted to $24–$25 from a previous $23–$24.
At last check, shares of Kate Spade were up 14.69 percent at $22.56.
Image Credit: By Jim.henderson (Own work) [CC0], via Wikimedia Commons© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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