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Morgan Stanley Initiates On Mid-Cap Footwear Stocks: DSW, Steven Madden And More

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On Thursday, analysts at Morgan Stanley initiated coverage on footwear sector stocks:

"The consensus view is internet pure plays will take share from retailers, but at a decreasing rate."

Skechers USA Inc (NYSE SKX) Overweight rating; $73 price target. Jay Sole stated, “SKX is a much different and stronger company today versus the last cycle.”

Deckers Outdoor Corp (NYSE: DECK) Overweight rating; $105.50 price target.
Analysts feel the company has undervalued growth and its UGG product is "is best positioned among peers to take advantage of customers increasingly shopping online."

DSW Inc. (NYSE: DSW) Underweight rating; $27 price target.
Sole anticipates downside to numbers and P/E contraction risk, "DSW's value proposition of great prices, selection,and convenience was differentiated, however, today the internet can match or beat DSW in all three areas."

Brown Shoe Company, Inc. (NYSE: BWS) Underweight rating; $24.50 price target. Sole stated, “We think as BWS lags peers, the market will increasingly see a more secularly challenged story and the multiple will revert from 17x today back to its 14x ten-year median.”

Steven Madden, Ltd. (NASDAQ: SHOO) Equal-weight rating; $35 price target. Sole declared, “We believe SHOO is the industry’s best women’s fashion footwear manufacturer and will likely benefit from consumers increasingly shopping online. However, the women's fashion footwear cycle is troughing and we don't anticipate an inflection until 2Q15 at the earliest.”

Wolverine World Wide, Inc. (NYSE: WWW) Equal-weight rating; $29 price target. Sole writes, “WWW has a good brand portfolio, but none of its 14 labels has yet turned into a business which can drive significant earnings growth for the entire company, like a Vans or an UGG.”

Genesco Inc. (NYSE: GCO) Equal-weight rating; $80 price target. Sole finds risks for the company are already priced into the stock, “We view Journeys,Lids,and Schuh, GCO’s three key retail businesses,at heightened risk from pure online competition as well as brand’s own websites.We forecast GCO gradually ceding share over time. However,at 14xFY1 EPS, we think risks are adequately priced in.”

Latest Ratings for BWS

DateFirmActionFromTo
Dec 2014Morgan StanleyUpgradesUnderweightEqual-Weight
Nov 2014Sterne AgeeUpgradesNeutralBuy
Oct 2014Morgan StanleyInitiates Coverage onUnderweight

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