UPDATE: Morgan Stanley Initiates Coverage On Vitamin Shoppe On EPS Upside Potential

In a report published Tuesday, Morgan Stanley analyst Simeon Gutman initiated coverage on

with an Overweight rating and $54.00 price target. In the report, Morgan Stanley noted, “We are initiating coverage of VSI with an Overweight rating and a $54 price target, as we believe the stock should benefit from both earnings upside and a possible multiple re-rating over the next 12 months. We do not believe the stock is pricing in an accelerating EPS growth rate and likely upside to consensus. Our 3% above consensus 2015 estimate of $2.90 reflects 10% sales growth and 80 bps of EBIT margin expansion and would be fueled by healthy 4-5% comps, modest gross margin expansion, stronger sales-driven expense leverage and the winding down of supply chain investments (worth $0.04-$0.05).” Vitamin Shoppe closed on Monday at $44.41.