UPDATE: JP Morgan Initiates Warnaco Group with Neutral, $47 PT; Execution and Geographic Risk

JP Morgan initiates its coverage on Warnaco Group WRC with a Neutral rating and a price target of $47. JP Morgan says, "WRC is in the midst of a transformational turnaround shifting its focus from 71% wholesale to owned retail (29%). While this is the right move for the business long term given enhanced brand image (greater control of CK) and Int'l growth (Asia and LatAm), execution risk is high (elevated SG&A investments) particularly in light of overseas macro concerns (Europe = 25%) and recent wholesale weakness domestically (women's sportswear). Longer term, we believe acquisition of a global brand (mgmt has spoken to $400-$500M appetite) is necessary to supplement its Calvin intimates business (crown jewel)." WRC closed at $43.91 on Thursday.