In a report published Thursday, Nomura Equity Research analyst Robert Drbul initiated coverage on 21 retailers. Drbul rates the Retail sector as neutral with 14 Buy, six Neutral, and one Reduce-rated stock.

For the sector as a whole, the analyst noted that sales are set to rebound and targeted investments by retailers are "encouraging". Nomura wrote, "Although we approach 2014 with some caution, we believe the consumer could benefit from some tailwinds versus last year, including no additional payroll tax increase, “real” raises, a multi-year U.S. stock market run, a stable and recovering housing market, and a shift to discretionary purchases (from durables) as we lap heavy durable goods spending from 2013."

Launching Coverage with a Buy

• The analyst initiated coverage on Coach COH with a Buy rating and a $56.00 price target. Drbul noted that the muted near-term outlook has created an "attractive entry-point, especially for patient investors." The brand name remains strong and the analyst reported that management is aware of the need for new product offering.
• Nomura is looking at an upside of estimates for Columbia Sportswear COLM due to strong demand in the winter weather and the expectation for this demand to continue. The analyst initiated coverage with a Buy and $80.00 price target.
• Drbul noted that Iconix Brand Group ICON has "high revenue visibility (we estimate that two-thirds of revenues are guaranteed), no inventory risk, minimal capital expenditures, and strong FCF generation." The analyst initiated coverage on Iconix with a Buy rating and a $45.00 price target.
• The analyst initiated coverage on Lululemon Athletica LULU with a Buy rating and $70.00 price target. Nomura noted that the brand remains strong and estimated that the company can double revenues over the next five to seven years. Drbul commneted, "high revenue visibility (we estimate that two-thirds of revenues are guaranteed), no inventory risk, minimal capital expenditures, and strong FCF generation." The analyst expects the U.S. footprint to expand to 300 stores and notes opportunity to increase productivity in U.S. stores.
• Nomura reported on the positive outlook for Nike NKE, initiated coverage with a Buy and $85.00 price target. The analyst noted his expectation for high-single-digit revenue growth, gross margin recovery, trends in accelerating futures and upside in women's business.
• Drbul initiated a Buy rating and $140.00 price target on PVH PVH. The analyst commented, "high revenue visibility (we estimate that two-thirds of revenues are guaranteed), no inventory risk, minimal capital expenditures, and strong FCF generation."
• The analyst noted V.F.'s VFC international expansion, growth in DTC business, and acquisitions. Nomura initiated coverage on V.F. with a Buy rating and $65.00 price target. Drbul added a positive and premium valuation is "warranted" due to the company's superior execution and the positive outlook for V.F.'s lifestyle brand growth strategy.

• Nomura initiated coverage on Costco Wholesale (NASDAQ: COST) with a Buy rating and $125.00 price target. The analyst wrote, "We believe investors are often looking for a better entry point into this high-quality, high-growth, global retailer, which has historically traded at a significant premium to its competitive set. With the shares ~10% off their 52-week highs, this might be that buying opportunity. We admire the business model, membership fee renewal rates, consistent traffic gains, global square-footage opportunity, and prospects for higher penetration of margin accretive private label products."
  The analyst reported that Kohl's (NYSE: KSS) is undervalued given its "competitive" productivity and operating margins compared with the company's competitors. Drbull commented that "With a loss of nearly $5bn in sales in 2012 and 2013, we believe a sales and market share recovery will take much longer than many may anticipate. The J.C. Penney customer has migrated to other department stores and off-price retailers, and these shifts could be difficult to restore." Nomura initiated a Buy rating and $57.00 price target on Kohl's.
  Drbul initiated coverage on Macy's (NYSE: M) with a Buy rating and $65.00 price target. The analyst noted that Macy's emerged as the "clear winner" during the difficult trends in 2013. Nomura added, "The company's comp-driving M.O.M. strategy, scale, and strong vendor relationships have led to outperformance relative to our Broadlines & Department Stores universe in a difficult and rapidly changing department store landscape, which we believe Macy's is well-equipped to navigate."
  Nomura initiated coverage on Ross Stores ROST with a Buy rating and $80.00 price target. The analyst reported "We expect the off-price channel to continue its torrid market share gains in the department store and apparel industry owing to its ability to offer strong national brands at low prices." Drbul added that room for continued growth remains with remaining domestic white space in the Midwest and Northeast.
  The analyst sees a "significant value" in shares of The TJX Companies (NYSE: TJX). Drbul expects "the off-price channel to continue to gain market share in the department store and apparel industry, due to its offering of national branded merchandise at deep discounts. We also believe the company can double its store base to over 6,000, from 3,208 at the end of 3Q13, with significant room for growth in HomeGoods and TJX Europe, where current penetration is less than 55% of its potential." Nomura initiated coverage on TJX with a Buy rating and $67.00 price target.
  Drbul initiated coverage on Wal-Mart Stores (NYSE: WMT) with a Buy rating and $85.00 price target due to unchallenged top-line results. The analyst noted that company continues to deliver consistent returns to shareholders and sees opportunities through e-commerce and an unptick in U.S. store traffic.
  Nomura reported that Tiffany & Co. (NYSE: TIF) is well-positioned for another year of solid momentum. The analyst wrote "the off-price channel to continue to gain market share in the department store and apparel industry, due to its offering of national branded merchandise at deep discounts. We also believe the company can double its store base to over 6,000, from 3,208 at the end of 3Q13, with significant room for growth in HomeGoods and TJX Europe, where current penetration is less than 55% of its potential."Drbul initiated coverage with a Buy rating and $100.00 price target.
  Launching Coverage with a Neutral Rating
  Drbul initiated coverage on Deckers Outdoor (NASDAQ: DECK) with a Neutral rating and $90.00 price target. The analyst commented that Deckers is expected to post solid results for the next two quarters. With the current strength of share price, Nomura remains neutral on the stock.
  Nomura reported that Hanesbrands' (NYSE: HBI) EPS increased 69% and operating margins were up 320bps. The analyst wrote, "The company has completed a multi-year deleveraging plan that transferred significant value from debt to equity holders. But the shares are up more than 87% from their 52-week lows and Street expectations have also risen substantially. As such, HBI shares are trading at a premium to their historical average and near fair valuation, in our view." Drbul initiated coverage with a Neutral rating and a $75.00 price target.
  The analyst initiated coverage on Ralph Lauren (NYSE: RL) with a Neutral rating and $167.00 price target. Drbul noted that although he believes in the continued strenth of the brand, he is cautious on near-term margin pressure. Nomura reported that shares are fairly valued and the analyst will remain cautious until he sees better visibility into accelerating comp sales and operating margin recovery.
  Drbul noted that Nordstrom's (NYSE: JWN) comps are down low-single digits year-to-date and has continued to experience margin erosion over the past several quarters. The analyst initiated coverage with a Neutral rating and $65.00 price target.
  Nomura initiated coverage on Stage Stores (NYSE: SSI) with a Neutral rating and $20.00 price target. The analyst remains cautious on Stage Stores due to "given difficult comp sales trends over the past year, attributable in large part to lapping the market share gains from dislocation at J.C. Penney in 2012, as well as an increasingly competitive and promotional retail environment."
  The analyst reported on a few of his concerns with Target (NYSE: TGT). Some of these concerns include slower traffic trends, disappointing results in Canada, the impact of the recent data breach on the company's REDcard business, and the halt of share repurchases outweigh the stock's current valuation levels." Nomura initiated coverage on Target with a Neutral rating and $62.00 price target.
  Launching Coverage with a Reduce Rating
  Nomura initiated coverage on J.C. Penney (NYSE: JCP) with a Reduce rating and $5.00 price target. The analyst commented, "With a loss of nearly $5bn in sales in 2012 and 2013, we believe a sales and market share recovery will take much longer than many may anticipate. The J.C. Penney customer has migrated to other department stores and off-price retailers, and these shifts could be difficult to restore."